Trending Issues in FLSA Litigation

Who qualifies as exempt, who is liable if you get it wrong, and who

decides where you contest it?

Proposed Changes for White Collar Exemptions

Or, “The End of the World As We Know It”What did happen?► March 13, 2014: President Obama instructed

the Department of Labor to review the “White Collar Exemptions,” which comprise the executive, administrative, professional (including computer professionals), and outside sales exemptions.

What Can We Expect?Modernize Raise the Minimum Salary Requirement► Most likely change

Modernize & Streamline Job Duties Test► Reflect modern economy► Clarify ambiguous phrases that regularly result in

large-scale litigation► May result in broadening of exposure that

previous Administration attempted to limit (deductions from salary, for example)

Dovetails with GAO FindingsFLSA Litigation is increasing sharplyGuidance from the Wage and Hour Division is decliningEveryone wants more interpretation of the exemption regulations

Changes Likely

FLSA White Collar Exemptions are a focus of the AdministrationIncreasing wages is a focus of the AdministrationThis is another way to affect wages, apart from raising the minimum wage

Can You Inherit Liability?

You’ve been prudentYou’ve reviewed classification of workers carefullyYou’ve erred on the side of cautionCan you still end up with an FLSA headache?

Successor Liability in Asset Purchase

Traditionally, seller’s liabilities do not pass to buyer in an asset dealBut, a buyer may be liable for a seller’s federal labor and employment liabilities if found to be a successor employerBegan with Supreme Court application in NLRB caseThe MacMillan substantial continuity test arises from a Sixth Circuit case

Successor Liability and the FLSA

It’s trendingThree Circuit Courts of Appeal have applied the federal common law standard for successor liability to FLSA claims► 3d, 7th, and 9th

The District Court for the Middle District of Tennessee has also applied this standard to FLSA claimsThree of the four cases decided in last 15 mos.

What Does This Mean?

Increasingly Difficult to Avoid Liability for Improperly Classifying Workers as Exempt Failing to Pay them Overtime Those tasked with pre-merger diligence and post-merger implementation of employment issues must be aware they may inherit not only the practical problems of integrating a misclassified workforce, but also liability for past mistakes

Federal Court Lawsuit or Arbitration?

Current Status under D.R. Horton► Fifth Circuit Ruling ► NLRB response

NLRB’s current positionWhere does that leave us?Pros and Cons of arbitration to consider“Arbitrability Issues” – Who decides?

Not Just Federal ConcernsTennessee is emphasizing enforcement employer practices that result in a failure to pay overtime, unemployment insurance tax premiums, and workers’ compensation► Typically, misclassified as independent

contractors or paid under the table