Yesterday, the Supreme Court of the United States granted a writ of certiorari in Christopher v. SmithKline Beecham Corp.  The Ninth Circuit’s opinion, now on appeal, can be viewed here.  The issue was whether pharmaceutical sales representatives are “outside salesman” as referenced in Section 213(a) of the Fair Labor Standards Act and therefore exempt from legal overtime requirements.  The Ninth Circuit Court of Appeals determined that the salespeople were exempt from overtime, thus refusing to defer to the Department of Labor’s regulations on this issue.

The Supreme Court has granted review on these issues:

“(1) Whether deference is owed to the Secretary of Labor’s interpretation of the Fair Labor Standards Act’s outside sales exemption and related regulations; and (2) whether the Fair Labor Standards Act’s outside sales exemption applies to pharmaceutical sales representatives.”

The petition for certiorari may be viewed here.

Categories: Judicial Decisions Tags: Appeals, Case Commentary, Department of Labor, FLSA, Labor and Employment, Ninth Circuit, Overtime, Sales Representatives, US Supreme Court, Wage and Hour

In a case that appears to one of first impression at the federal appellate level, the Ninth Circuit ruled in Cumbie v. Woody Woo, Inc., that there are no tip-pooling claims under the Fair Labor Standards Act (FLSA) for restaurant employees who are paid more than the minimum wage before tips.  FLSA, the federal wage and hour law, regulates how tips can be distributed and/or shared as part of its regulation of the minimum wage.  As restaurants commonly do, servers can be paid a small base amount and make the rest of their wages in tips.  Properly arranged, the tips paid to the servers are a “tip credit” for the employers that combines with the base pay to meet the minimum wage.  An employer can use a “tip pool” as part of its tipping system if it meets two requirements: (1) the employee is fully informed; and (2) the tip pool only includes “other customarily tipped employees.”  Disputes often involve this second requirement, e.g. if tips are shared with managers (who are not customarily tipped).

Reading the FLSA in this way, the Court held that because the servers in this case (who had brought a class and collective action case) were receiving a base pay that was already greater than the minimum wage, the employer was not taking advantage of the “tip credit,” and therefore did not have follow the tip-pooling regulations.  Of course, if the servers’ base pay had been less than minimum wage, the outcome would be entirely different.  (Also note that different analysis may apply under the North Carolina Wage and Hour Act.)

Categories: Judicial Decisions Tags: Case Commentary, Class Action, Collective Action, Fair Labor Standards Act, FLSA, Labor and Employment, Minimum Wage, NCWHA, Ninth Circuit, Tip Credit, Tip Pooling

In Boucher v. Shaw, the Ninth Circuit Court of Appeals ruled that individual managers/owners — in this case a hotel’s CEO, CFO, and labor/employment manager — may be held liable for unpaid wages, vacation, and holiday pay under the Fair Labor Standards Act (FLSA).  The FLSA allows suits to be brought against individuals, in addition to the employer-company itself, in certain cases.  Specifically, individuals can be on the hook if they “exercise control over the nature and structure of the employment relationship,” such as the managers here.   Significantly, the court also held that even though the company had gone into bankruptcy, the claims against the individual managers could proceed all the same.  The bankruptcy affects claims against the company, but not claims against the individual managers.  This is an important principle for workers who are cheated out of wages by failing companies.

Categories: Judicial Decisions Tags: Bankruptcy, Case Commentary, Fair Labor Standards Act, FLSA, Labor and Employment, Lost Wages, Manager Liability, Ninth Circuit