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Debate Over Federal Minimum Wage Intensifies, But States Don’t Wait

[December 11, 2013]  On December 5, 2013, fast-food workers in more than 100 U.S. cities protested their low hourly wages in a one-day strike, seeking $15 per hour and the right to form a union.  Restaurant representatives called the protests publicity stunts by outside interests, including union groups.

The protest followed President Obama’s speech last week, in which he addressed income inequality and called on the Senate to pass a pending bill that would increase the federal minimum wage to $10.10 per hour.  (The current minimum wage of $7.25 per hour, about $15,000 per year, has been in effect since 2009.)  Even if the Senate passes the bill, the bill appears unlikely to receive a vote in the Republican-controlled House.

Some states are not waiting for the federal government to act.  For example, California, Connecticut, New Jersey, New York, and Rhode Island passed measures in 2013 to raise their minimum wages.

Just last week, the Council of the District of Columbia unanimously voted to advance a bill raising the minimum wage for the nation’s capital to $11.50 per hour in 2016.  While the bill still must get through a final vote and a possible mayoral veto, its passage appears likely.

In an apparent first, the D.C. wage increase was part of a coordinated effort with D.C.’s neighboring Maryland counties, who have already approved increases of their minimum wage to $11.50 in 2017.

In Massachusetts, the Senate recently passed a minimum wage bill that would raise the minimum wage from the current $8 per hour to $11 per hour.  The bill now moves to the Massachusetts House of Representatives.

Separately, a Massachusetts ballot initiative would raise the minimum wage to $9.25 per hour in January 2015, and to $10.50 per hour in January 2016, with later increases based on inflation.  The ballot initiative recently submitted the required number of certified signatures to the Secretary of the State, and, thus, the question appears likely to be on the 2014 ballot.

Given the current gridlock in D.C., Congress seems unlikely to pass a federal minimum wage increase in the next year.  However, Massachusetts and other states and localities may increase their minimum wages.  Thus, multi-state employers should keep their eyes on the headlines and keep track of the patchwork of state and local minimum wage laws.

Keeping Score: Court Approved Settlement Of Wage Class Action

[November 15, 2013]  The “scorecard” in a recent, relatively small class action settlement in Massachusetts seems to offer insight in such questions as: Why do class actions get litigated – and almost always settled?  Who are the real winners and losers?

A federal district court judge in Massachusetts recently approved a $2.2 million settlement of claims that a Massachusetts hospital violated the Fair Labor Standards Act (“FLSA”) and the Employee Retirement Income Security Act (“ERISA”).  The more than 5,000 class members alleged that they were not paid for hours worked over 40 hours per week, including: (1) work during uncompensated meal breaks; (2) work before and after their shifts; and (3) training after regular work hours.

The parties arrived at the settlement after extensive mediation.  The $2.2 million settlement was based on an analysis of payroll data, including the actual hours and pay rates for each employee, the employees’ statements about their uncompensated hours, and their claim for attorneys’ fees.

With that background, here is the “scorecard” in this settlement:

Plaintiffs’ Attorneys:  + $733,000
Each Plaintiff (average):  + $250 (approx.)
Defendant Hospital:  – $2,200,000

The plaintiffs’ attorneys will walk away with one-third of the settlement, an enormous pay day for them of more than $733,000.  In contrast, some individual class members will receive as little as $25!

A more detailed discussion of this case will be published soon as an E-Alert.  Stay tuned!

Mass. Fur Company Agrees To Pay Almost One Million Dollars In Damages And Penalties For Wage Violations

[October 18, 2013]  Pursuant to a consent judgment announced by the U.S. Department of Labor (“DOL”) last month, a Boston fur company and its owner will pay almost One Million Dollars to 14 employees to settle wage and hour claims brought by the DOL in the federal court in Massachusetts.

While the employer has not admitted any liability, the DOL alleged that the workers:  (1) were required to work 10 hours per day, six days per week at the animal hide business; (2) were paid a daily wage that was far below the minimum wage; and (3) were not paid overtime.

The DOL further alleged that the employer retaliated against several workers for cooperating with the DOL’s investigation.

The federal Fair Labor Standards Act (“FLSA”) authorizes the DOL to gather data concerning wages, hours, and other employment practices; enter an employer’s premises and inspect its records; and question employees to determine whether any person has violated any provision of the FLSA.

We recommend that any employer facing a DOL investigation work closely with legal counsel to properly narrow the scope of the investigation and to comply appropriately with the DOL’s requests.

Out of Sight, Not Out of Mind: Wage Age Protection Extends to Salesperson Living and Operating Outside Massachusetts

[July 16, 2013]  In light of a recent Massachusetts Appeals Court decision, Massachusetts employers should be mindful of potential liability under the Wage Act for unpaid wages, including sales commissions, to employees who reside outside the Commonwealth and who perform their day-to-day sales activities by traveling and telecommuting from other states.  Failing to recognize that Wage Act protection could extend to these remote employees could prove costly for employers and their officers (who may be individually liable):  the Appeals Court affirmed a judgment for a Florida-based sales director against the CEO of a Massachusetts-based company for more than $300,000.00, plus attorneys’ fees.

In the decision, Dow v. Casale, the Appeals Court applied the choice-of-law doctrine and determined that Massachusetts had the most significant relationship to the parties and their employment relationship, irrespective of where the plaintiff lived and was physically located from day to day.  As a result, the court concluded it was appropriate and reasonable to apply Massachusetts law to plaintiff’s claims and to afford him the remedies provided under the Wage Act.

As a result of the Dow ruling, Massachusetts employers should recognize that the scope of the Wage Act extends beyond the physical boundaries of the Commonwealth.  In today’s telecommuting world where so many employees work from locations other than a company’s Massachusetts headquarters or local offices, it is easy for employers to forget the potential costly ramifications of failing to timely pay these employees wages they are owed.  In light of the Wage Act’s mandatory treble damages and attorneys’ fees provisions, an employer’s “out of sight, out of mind” attitude could prove costly.

Employers should therefore audit their practices concerning out-of-state employees and, if possible, take steps to reduce the employees’ relationships with Massachusetts (e.g., by generating paperwork for out-of-state customers from the remote employee’s location and by instructing the employee to use his or her local contact information on his or her business cards).  Employers may wish to consult employment counsel concerning compliance with the Massachusetts Wage Act for any out-of-state employees.