CURRENT TRENDS AND TOPICS UNDER
FAIR LABOR STANDARDS ACT
Don Foty
Kennedy Hodges, LLP
Background
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Significant increase in the number of
FLSA filings
1990 – 880 cases filed nationwide
2014 – 8,086 cases filed
nationwide
Both the DOL and the Plaintiffs’ Bar
have been very active recently
Department of Labor


In 2014, DOL brought
over 10,000 cases
nationwide
50/50 minimum wage
and overtime claims

Most common
industries targeted
 Restaurant
– 5,118
 Healthcare – 1,581
 Agriculture – 1,430
 Day Care – 1,144
 Hotel – 1,049
Plaintiff’s Bar
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4,859 FLSA cases filed in
federal court past 6 months
 Florida – 1,128
 New York – 918
 Texas – 643
 Georgia – 298
 Illinois - 228
Does not include wage and
hour cases filed in state
court – i.e. California
Industries Targeted Nationally

1st - Restaurant
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2nd - Retail
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Tip Credit Violations
Requiring non-tip generating work at less than minimum wage
Off-the-clock claims for bag checks
Unpaid meetings
Misclassification of store managers as exempt
3rd - Transportation
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Independent contractor violations
Paying by the mile without overtime
Industries Targeted - Texas

Oil and Gas Industry
Administrative
Exemption
 Day Rate
 Independent Contractor
 Regular Rate of Pay
 Meal Break

Administrative Exemption
29 C.F.R. § 541.200
Duties Test
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A. “primary duty” of performing office or non-manual work directly
related to the management or “general business operations” of the
employer or the employer’s customers
B. “primary duty” that includes the exercise of discretion and
independent judgment with respect to matters of significance

Clark v. Centene Co. of Texas, LLP, 44 F. Supp. 3d 674 (W.D. Tex. 2014)

Hanson, et al. v. Camin Cargo Control, Inc., 2015 WL 1737394 (Apr. 16, 2015)

Zannikos, et al. v. Oil Inspections (USA), Inc., 605 Fed. App’x 349 (Mar. 27, 2015)
Hanson v. Camin Cargo

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Class of dispatchers in the oil and gas inspection industry
Summary judgment was granted by Magistrate Judge Smith
Reasoning: Element 2 not satisfied
 Dispatchers did not perform work related to “general
business operations” but to work related to the “service”
provided to customers
 Ancillary duties do not matter – only “primary” duty
 Did not need to address element 3
Zannikos v. Oil Inspections
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Marine superintendents who performed the
following tasks:
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Monitored oil transfers to ensure that it complied with the law
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Monitored loading of cargo to ensure that the it complied with the law
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Reported losses and errors
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Ensured that transfers complied with company safety policies and national
standards
Performed quality control functions, including inspecting loads and equipment to
identify potential problems with equipment or procedures
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Made recommendations for quality control
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Oversaw the work of independent inspectors during the transfer process
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Ensured that the inspectors were using proper equipment and taking proper
measurements
Zannikos v. Oil Inspections
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
Affirmed summary judgment of the trial court that the
administrative exemption not applicable
Reasoning – the plaintiffs did not exercise sufficient
“independent judgment and discretion”
 Observed the process – no independent judgment and
discretion
 Reported non-compliance – no independent judgment and
discretion
 Enforced pre-established policies and national guidelines –
no independent judgment and discretion
Day Rate Violations
Day Rate
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Question – do the “white collar” exemptions apply
to a worker who is paid solely on a day rate basis?
Element 1 – “Compensated on a salary or fee
basis at a rate of note less than $455 per
week”
Salary/Fee Basis Requirement
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Regulations identify at least 7 different methods to pay an employee
 (1) hourly, (2) piece rate, (3) day rate, (4) job rate, (5) salary, (6) fee
basis, and (7) commissions
Only two are permissible for the “white collar” exemptions
Trahan v. Honghua Am., LLC, No. CIV.A. H-11-2271, 2013 WL 2617894, at
*13 (S.D. Tex. June 10, 2013)
“To fall under the highly compensated employee exemption, an
employee must be paid on a salary or fee basis.…Here,
Defendant's own evidence makes clear that
Plaintiffs were paid on
an hourly basis, not on a salaried basis.”
Salary Defined
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Guaranteed, pre-determined amount each week that is not
subject to variations based upon quantity or quality of work 29 C.F.R. § 541.602
The employee must receive the same amount each week
regardless of the number of hours or days worked.
Worker paid a day rate is not paid a predetermined amount
each week
Fee Basis Defined
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Set amount paid based upon the accomplishment of a single
task. - 29 C.F.R. § 541.605
“[p]ayments based on the number of hours or days worked
and not on the accomplishment of a given single task are not
considered payment on a fee basis.” - 29 C.F.R. § 541.605
Paid based upon number of days worked
Conclusion
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
Do the white collar exemptions apply to a worker
paid solely on a day rate basis?
Answer: No
Independent Contractors
DOL Administrator’s Interpretation 2015-1
AI Number 2015-1
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July 15, 2015 – DOL Wage and Hour Division issued
AI Number 2015-1
Guidance to courts for determining when a worker is
an employee or independent contractor
AI concludes – “most workers are employees under
the FLSA’s broad definition.”
Control Factor
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Minimized control factor
 “FLSA covers workers of an employer even if the employer
does not exercise the requisite control over the worker.”
 “Economic dependence” is all that is necessary for control
Control factor does not take overtake the other factors
Full time worker, deriving all of his income from one employer
will likely be considered an “employee”
Deference to AI

Martin v. Cooper Elec., Supply Co., 940 F.2d 896 (3rd
Cir. 1991)
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DOL interpretations of the FLSA – “should be given
‘considerable and in some cases decisive weight.’”
O’Conner v. Uber Tech., Inc., 2015 WL 5138097
(N.D. Cal. Sept. 1, 2015)

Relied upon AI to certify case as Rule 23 Class Action
Regular Rate of Pay
Regular Rate of Pay

All remuneration for employment must included
except for those specifically excluded:
 Business
expense reimbursements
 Premium payments for overtime
 Contributions to bona fide plans for retirement, life,
accident, health insurance, or similar benefits
 Discretionary bonuses
 Gifts
29 U.S.C. § 207(e)
Business Expense Reimbursements

Employer bears the burden of proving that a
reimbursed expense should be excluded
 Picton
v. Excel Group, Inc., 192 F. Supp. 2d 706 (E.D.
Tex. 2001).

Two part test:
 A.
Is the payment primarily for the “benefit or
convenience” of the employee or the employer?
 B. If the payment is primarily for the “benefit or
convenience” of the employer, than was the amount a
reasonable approximate of the actual expense
Per Diem Payments
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“[I]f the amount of the per diem or other subsistence
payment is based upon and thus varies with the
number of hours worked per day or week, such
payments are part of the regular rate in their
entirety.”
 DOL Field Operations Handbook
Gagnon v. United Technisource

Fifth Circuit affirmed summary judgment for an employee for
the employer’s failure to include the amount of a per diem in
the regular rate of pay
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Amount of per diem was expressed in terms of an hourly rate
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Increased depending upon the number of hours worked
Hanson v. Camin Cargo
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Employer gave employees $7 per day if they worked 8 hours
Plus an extra $7 for each additional 4 hours worked up to
$21 per day
Summary judgment for employees
Amount of the payment was “based upon and varies with the
number of hours worked.”
Car/Mileage Payments
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Reimbursement for cost of home to work travel always
for the “benefit or convenience” of employee
Howe v. Hoffman-Curtis Partners, Ltd., 2005 W.
6443877 (S.D. Tex. 2005)
$10,000 per year car allowance
 Only travel was home to work travel
 Summary judgment for employee
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Car/Mileage Payment
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Reimbursement for work related travel, i.e. not home to work
travel, must still be a reasonable approximation of actual
expenses.
Hanson, et al. v. Camin Cargo Control, Inc., 2015 WL 1737394
(Apr. 16, 2015)
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Undisputed that workers drove their vehicles for work
Reimbursed a combination of an annual car allowance plus a per
mile reimbursement
With both payments, reimbursed at a rate of $2.32 per mile on
average
Summary judgment for workers
Meal Payments

Two regulations
C.F.R. § 778.217(d) – employer paying for
employee lunches constitutes wages
 29 C.F.R. § 531.32 – “meals are always regarded as
primarily for the benefit and convenience of the
employee.“
 29
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DOL Field Operations Handbook – meals furnished
by employer are wages
Bonuses
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Non-discretionary bonuses must be included in the regular rate
of pay
Few bonuses are truly discretionary
If employer announces in advance the ability to earn the bonus
and sets requirements to earn the bonus, it is non-discretionary
Bonuses designed to encourage more efficient operations or
for employees to work harder are not discretionary
Meal Breaks
Regulations
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Some breaks are compensable, others are not
“Rest Break” – Compensable
C.F.R. § 785.18 – “rest periods of short durations,
running from about 5 minutes to 20 minutes” are
compensable
 29

“Meal Break” – Not Compensable
C.F.R. § 785.19 – employees do not need to be
paid for actual meal periods of 30 min or more
 29
But Meal Breaks Can Be Compensable

Meal breaks are compensable under the following situations
 Employee performs work during the meal break, or

“[T]he meal period is used predominantly for the benefit of
the employer”
 Limitations on the employees’ personal freedom that
benefits the employer
 Restrictions are placed on the employees’ activities
 Frequency of the employees being interrupted for work
activities
Naylor v. Securiguard

Fifth Circuit examined whether time spent during a
meal break was compensable
Employer provided a 30 min meal break
 Required the guards to drive a company car to a
designated break building 12 min away
 While driving could engage in any personal activities such
as eating, smoking, or talking on the phone
 Result – less than 30 min actually eating meal

Naylor v. Securiguard
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Fifth Circuit reversed the trial court’s summary judgment in
favor of the employer
Fact issue as to whether the 12 min drive to the break area
“predominantly benefited the employer or the employee”
“a jury could find that preventing an employee from
eating…for twelve out of thirty minutes during every break is
a meaningfuly limitation on the employee’s freedom”
Important Recent Decisions
Offers of Judgment
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What happens when an employer tenders a Rule 68 offer of
judgment less than full relief?
Answer: Case is not moot
 Payne v. Progressive Fin. Servs., Inc., 748 F.3d 605 (5th Cir.
2014)
 An offer of judgment that “does not offer to meet the
plaintiff’s full demand for relief—does not render the
plaintiff’s claims moot.”
Offers of Judgment
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What happens when an employer tenders an offer of
judgment that does meet the individual plaintiff’s full demand
in a class or collective action prior to certification?
Answer: Case is not moot
 Hooks v. Landmark Industries, Inc., 797 F.3d 309 (5th Cir.
2015)
 “Given that Hooks’ individual claim was not mooted by the
unaccepted offer, neither were the class claims.”
Hooks v. Landmark
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Plaintiff made a withdrawal from an ATM and was charged a
fee without notice
Plaintiff filed a claim under the Electronic Funds Transfer Act as
a class action
Before moving for class certification, Landmark tendered an
offer of judgment for the maximum amount available under
the statute
Trial court dismissed the case
Hooks v. Landmark
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Fifth Circuit reversed relying upon Justice Kagan’s dissent in
Genesis
 “[A]n unaccepted offer of judgment cannot moot a case.”
Fifth Circuit stated: “[i]t is hornbook law that the rejection of an
offer nullifies the offer.”
Result – Hooks’ individual claim not moot and the class claims
not moot
Other Circuits

Other Circuit Courts Agree with Fifth Circuit:
v. First Index, Inc., 2015 WL 4652878 (7th
Cir. 2015)
 Diaz v. First Am. Home Buyers Prot. Corp., 732 F.3d 948
(9th Cir. 2013)
 Stein v. Buccaneers Ltd. P’Ship, 772 F.3d 698 (11th Cir.
2014)
 Chapman
Conditional Certification
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Email notice and electronic signature commonplace
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“Happy Camper” affidavits not persuasive to contest
conditional certification
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Dyson v. Stuart Petroleum Testers, Inc., 308 F.R.D. 510 (W.D. Tex. 2015)
Vassallo v. Goodman Networks, Inc., 2015 WL 3793208 (E.D. Tex. 2015)
Job titles not dispositive

Tamz v. BHP Billiton Petroleum, 2015 WL 7075971 (W.D. Tex. 2015)
Settlement of FLSA Claims

Bodle v. TXL Mortg. Corp., 788 F.3d 159 (5th Cir. 2015)
 General release of claims not sufficient to waive FLSA claims
 Distinguished Martin v. Spring Break #83
 In Martin, money was paid to the workers to resolve a
genuine dispute over wages and hours worked
 In Bodle, the general release did not envision FLSA claims
and no money was paid to resolve a genuine dispute
concerning wages and hours worked.
Supreme Court Cases
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Tyson Foods Inc. v. Bouphakeo, cert granted 135
S.Ct. 2806 (2015)
Campbell-Ewald Co. v. Gomez, cert granted 135 S.
Ct. 2311 (2015)
END