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On March 6, 2024, President Biden issued an Executive Order designed to increase participation in the U.S. Department of Labor’s Registered Apprenticeship Program (“the Program”). The purpose of the Program is to connect job seekers looking to learn new skills with employers looking for qualified workers. 

Continue Reading Biden Administration Incentivizing Participation in Apprenticeship Programs
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On March 12, 2024, the United States Court of Appeals for the Sixth Circuit reversed two separate district court decisions addressing how pizza delivery drivers should be reimbursed for their vehicle-related expenses under the Fair Labor Standards Act (FLSA).

The underlying cases involved minimum wage claims under the FLSA.  In both cases, the drivers alleged that their employers had not sufficiently reimbursed them for the expenses they incurred while using their personal vehicles to make deliveries, resulting in the employees earning less than the minimum wage.  One employer had reimbursed drivers 28 cents per mile, whereas the other employer had paid a flat-fee of $1.00-$1.50 per delivery.

Though the FLSA does not expressly require employers to reimburse employees for work-related expenses, the failure to fully reimburse employees for their personal expenses can violate the FLSA if these out-of-pocket expenses cause the employees’ weekly wages to fall below the minimum wage. 

This is generally referred to as the “free and clear” rule.   Specifically, FLSA regulations state that each employee’s minimum wages must be “paid finally and unconditionally or ‘free and clear’” of any “kick-back” to the employer.  29 C.F.R. § 531.35.  These regulations likewise provide that, if an employer requires an employee to “provide tools of the trade” for purposes of “the performance of the employer’s particular work,” the employer violates the FLSA if “the cost of such tools purchased by the employee cuts into the minimum or overtime wages required to be paid to him under the Act.”  Therefore, if an employer requires a minimum-wage employee to provide his own “tools” for work, the employer must reimburse him for 100% of the cost of doing so.

The Sixth Circuit addressed two different approaches to reimbursing expenses.  In the first case, the district court had agreed with the plaintiffs that the employer should use the standard IRS mileage rate (54 cents) to reimburse employees.  In the second case, the district court had sided with the employer and held that it could use a “reasonable approximation” of the costs.  The Sixth Circuit rejected both approaches.

In doing so, the Sixth Circuit started with the premise that the FLSA is an “Occam’s Razor” in that the FLSA “says that an employee is entitled to the minimum wage specified therein—period.”  From there, the Sixth Circuit rejected the use of the IRS mileage reimbursement rate because it could result in an underpayment or overpayment of the drivers’ actual expenses.  The Sixth Circuit noted that the IRS rate was a “nationwide average” that did not necessarily reflect each individual driver’s actual costs, which could vary by location, type of vehicle, and each driver’s specific driving habits.  The Sixth Circuit likewise rejected the employer’s attempt to use a “reasonable approximation” of the expenses because, by its very nature, an approximation would not fully reimburse employees for their actual expenses in all instances.

Though the Sixth Circuit acknowledged the difficulty of correctly calculating each driver’s actual expenses, the Sixth Circuit was not entirely sympathetic, writing: “[T]he employers themselves created this situation: first by paying their drivers the bare minimum wage; then by requiring them to provide their own vehicles to deliver pizzas on the defendants’ behalf; and finally by cutting it close (at least according to the allegations here) as to whether they have adequately reimbursed their drivers for the cost of providing those vehicles.  Remove any of those elements and these cases likely do not get filed.”

Despite rejecting both approaches, the Sixth Circuit declined to articulate the standard that the district courts should have used.  Instead, the Sixth Circuit suggested that the district courts should consider on remand whether some type of burden-shifting approach would be appropriate: “For example, the employee might present prima facie proof that a reimbursement was inadequate; the employer might then bear the burden of showing that the reimbursement bore a demonstrable relationship to the employee’s actual costs; and then the employee would bear the burden of proving the employer’s reasoning wrong.  Or perhaps such an arrangement might not be appropriate.”

It is unclear if other courts will endorse the Sixth Circuit’s approach.  However, for now, it is safe to say that this remains an open question in the Sixth Circuit, and employers should continue to watch this space for developments.

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Update: On March 8, 2024, the Eastern District of Texas granted summary judgment in favor of the Chamber of Commerce and struck down the NLRB’s new final joint employer rule. The opinion conducts a thorough review of the history of the joint employer standard and ultimately concludes that the Final Rule is contrary to the common law. The opinion critiques the Board’s rulemaking stating they failed to adequately address the disruptive effects of the new rule, resolve ambiguities, or explain how it will not cause piece-meal bargaining.  The opinion then leaves the previous rule from 2020 in place which requires an entity to “possess and exercise such substantial direct and immediate control over one or more essential terms or conditions” of employment to be considered an employer. The NLRB is likely to appeal and we will continue to monitor further developments. Our previous post discusses the challenge and legal proceedings before the Eastern District of Texas.

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Continue Reading An (Un)Predictable Future – 2024 Employment Issues to Watch
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The NRLB has hit another roadblock in its implementation of a new final joint employer rule (the “Final Rule”) as a Texas federal judge delayed its implementation until March 11. The Final Rule, which was supposed to take effect on February 26, would have made organizations liable for violations of the NLRA if they had direct or indirect control over the terms and conditions of employment of another firm’s employees. This change increases the potential of liability from franchising or contracting with third parties. To see more information on the implications of the Final Rule, see our previous articles here and here.

Continue Reading NLRB’s Final Joint Employer Rule Stayed Amid Legal Challenges
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Last week, New York’s Governor signed a bill into law that effectively prohibits employers from accessing employees’ or job applicants’ personal social media accounts. The law goes into effect on March 12, 2024.

Continue Reading New Restrictions on New York Employers’ Access to Employee and Applicant Social Media Accounts
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On February 8, 2024, the U.S. Supreme Court issued a unanimous opinion holding that a whistleblower with a retaliation claim under the Sarbanes-Oxley Act of 2002 (“SOX”) does not need to establish that their employer acted with “retaliatory intent” to succeed on their claim. An employee must merely show that their protected whistleblowing activity was a “contributing factor” in an adverse employment action against them by their employer. Murray v. UBS Securities, LLC, 144 S.Ct. 445 (2024). An employer’s retaliatory intent or lack of animosity is “irrelevant.”  Id. at 446.

Continue Reading SCOTUS Holding Reinforces Employee-Friendly SOX Whistleblower Burden
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On February 15, 2024, California lawmakers introduced the bill AB 2930.  AB 2930 seeks to regulate use of artificial intelligence (“AI”) in various industries to combat “algorithmic discrimination.”  The proposed bill defines “algorithmic discrimination” as a “condition in which an automated decision tool contributes to unjustified differential treatment or impacts disfavoring people” based on various protected characteristics including actual or perceived race, color, ethnicity, sex, national origin, disability, and veteran status. 

Continue Reading California Seeks to Regulate Employer Use of AI
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The legal path between employee arbitration agreements under the Federal Arbitration Act (“FAA”) and representative claims under the California Private Attorney General Act (“PAGA”) has been anything but smooth. A new (albeit unpublished and uncitable) case, Piran v. Yamaha Motor Corp., et al., No. G062198, 2024 WL 484845 (Cal. Ct. App. Feb. 8, 2024)(unpub.) (“Yamaha”), helps to illustrate the challenges and unanswered questions lingering in the wake of this rapidly-developing area of law.

Continue Reading In High Stakes Battle Between Arbitration and PAGA, Wins, Losses, and Questions