A sometimes-overlooked requirement for classifying an employee as exempt from overtime is that, with limited exceptions, the employee must be paid on a “salary basis.” [1] Indeed, when employers fail to pay their exempt employees on a salary basis, they may be subject to lawsuits alleging exempt misclassification. As such, properly paying employees on a salary basis is critical to classifying employees as exempt. The General Rule Among other requirements, in order for an employer…

In November 2020, California voters approved Proposition 22, removing businesses that operate on-demand rideshare and food delivery platforms from the scope of AB 5, California’s controversial independent contractor law.  But before voters approved Proposition 22, the Attorney General of California filed suit against two such businesses, seeking injunctive relief, restitution, and penalties. As we wrote about here, in August 2020, a California Superior Court judge issued a preliminary injunction prohibiting those businesses from…

On January 29, 2021, the U.S. Department of Labor announced the immediate termination of its Payroll Audit Independent Determination Program (PAID).  Launched in March 2018 by the Wage and Hour Division (WHD), PAID was intended to resolve wage and hour disputes with greater expediency and at lower cost to employers.  However, in the WHD’s press release, Principal Deputy Administrator Jessica Looman indicated that the program had not achieved the desired effect, stating that the…

The Wage and Hour Division of the U.S. Department of Labor (“WHD”) issued six opinion letters in January 2021.[1]  They address a number of important issues under the Fair Labor and Standards Act (“FLSA”).  To ensure wage and hour compliance, we recommend reviewing these letters closely and consulting counsel with any questions as to how they may apply to a specific business situation. FLSA2021-1 In FLSA2021-1, the WHD addressed whether account managers…

In a provocative  decision in the case known as  Swales v. KLLM Transport Servs., L.L.C., No. 19-60847 (5th Cir. 2021), the U.S. Court of Appeals for the Fifth Circuit broke from the pack by upending the standard two-step process for Fair Labor Standards Act (“FLSA” or the “Act”) collective certification. The Court opined that the two-step process followed by many, if not most, district courts throughout the country wrongly permitted conditional certification of…

On January 19, 2021, the U.S. Department of Labor’s Wage and Hour Division (“WHD”) issued an Opinion Letter applying the Department’s recently-issued Final Rule concerning Independent Contractor Status under the Fair Labor Standards Act (the “Final Rule”).  This Opinion Letter provides helpful guidance to businesses, especially those in highly-regulated industries, on how to properly structure their relationships with independent contractors under the Fair Labor Standards Act (“FLSA”). As background, the FLSA’s minimum wage and overtime…