Management Update

Time is Money: Facing Wage and Hour Issues

DOL’s Crackdown on Child Labor Violations

By: Fred Preis and Philip Giorlando

With the upcoming Spring and Summer school breaks leading to more minors being employed, the Department of Labor has issued a new initiative demonstrating its focus on violation of child labor laws due to recent findings of increased violations.

The initiative not only targets specific companies hiring child labor but seeks to enforce child labor laws aggressively for contractors and their subcontractors. This increased focus will impact many industries heavily with teenage after-school and summer job positions, such as the retail and food service industries. If a business hires minors, now is the time to ensure compliance with child labor laws because potential penalties can be severe.

Child Labor Rules

The child labor laws of the Federal wage and hour law generally fit into two categories: laws addressing the hours of work that the child can work, and laws addressing the types of duties the child can perform. Generally, minors aged 14 and 15 are limited to working:

outside of school hours,
no more than 3 hours on a school day,
no more than 8 hours on a non-school day,
no more than 18 hours during a week when school is in session,
no more than 40 hours during a week when school is not in session, and
only between 7 AM and 7 PM, except between June 1 and Labor Day when the timeframe is extended to 9 PM.

Minors aged 14 and 15 are prohibited from working in most occupations involving transportation, construction, warehousing, communications, and public utilities. Further, they may not operate power-driven machinery, bake, conduct door-to-door sales or other peddling activities, or work from ladders or scaffolds. They also cannot perform duties that involve cooking over an open flame or with certain deep fryers.

Foodservice and Food Processing—Biggest Targets

The services most frequently targeted by these violations are those in the food service industry, which typically hires minor workers for after-school, spring break, and summertime employment, but have higher restrictions than most industries in which minors work, such as retail. Because of this, companies in the food service industry must be especially careful and ensure proper documentation of the services that minors perform and the hours that minors work. Additionally, should such industries continue to hire minors, they should audit the hours and duties performed by minors on at least an annual basis. Further, such employers should train mid-level managers to ensure that their minor employees are working the proper duties and proper hours pursuant to Federal child labor laws.

The Department of Labor has continued to show its focus on child labor laws, and employers should audit their minor employees, and the process for employing and scheduling minor employees, to ensure that they are in compliance with Federal child labor laws. If you need further guidance, please feel free to call.

U.S. Third Circuit Court Says Paid Time Off is NOT Part of an Employee’s Salary Under the Fair Labor Standards Act

By: Alexandra Hains

An employer did not run afoul of the Fair Labor Standards Act (“FLSA”) when it deducted paid time off (“PTO”) from employees who failed to meet productivity goals, the United States Court of Appeals for the Third Circuit ruled in a unanimous decision in Higgins v. Bayada Home Health Care, Inc., No. 21-3286 (3d Cir., March 15, 2023).

Plaintiffs were registered nurses who formerly worked for Bayada, a company providing medical and related support services for patients in their homes. Plaintiffs were full-time salaried employees and were required to meet weekly “productivity minimums.” To meet their productivity minimum, employees must accumulate a specified number of “productivity points” a week – each point being roughly equivalent to 1.33 hours of work. The productivity points were awarded in exchange for completing work tasks. When employees exceeded their productivity minimums, they received additional compensation. On the other hand, if employees failed to meet their weekly productivity minimums, Bayada would withdraw from the employees’ available PTO to supplement the difference between the points they were expected to earn and what they actually earned. Bayada did not deduct from an employee’s guaranteed base salary when the employee lacked sufficient PTO to cover a productivity point deficit.

The employees sued, alleging that PTO was part of their salary and the deductions were in violation of the FLSA. The United States District Court for the Middle District of Pennsylvania disagreed with the employees and dismissed their claim on summary judgment.

On appeal, the Third Circuit court held that an employer does not violate the FLSA by deducting from an employee’s PTO because, when an employer docks an employee’s PTO, but not her base pay, the predetermined amount that the employee receives at the end of the pay period does not change. Than an employee might at some point be able to convert her PTO into case does not alter that fact. The Court held that PTO, for the purposes of the FLSA, is a fringe benefit and as no effect on the employee’s salary or wages.

This case marks the first time that a U.S. appeals court was asked whether paid time off counts as part of an employee's salary. The FLSA prohibits employers from reducing the pay of an exempt employee paid on a salary basis, except for a few narrow exceptions. Employers that do make improper deductions may risk an employee’s exempt status, entitling the employee to overtime pay.

Weeding Out: Drug Testing Woes for Unionized Workplaces

By: Kayla M. Jacob, Rachael Jeanfreau, and E. Fredrick Preis, Jr.

In 2022, union organizing soared as employees of certain Amazon, Chipotle, Apple, Trader Joe’s, and Starbucks locations voted to unionize. With support of unions at an all-time high, employers may be so focused on a pending union vote or upcoming collective bargaining agreement negotiations that reviewing drug testing policies for compliance with Federal, State, and local laws may be on the back burner. But marijuana use by employees remains a problem even for unionized workplaces and, in fact, becomes a more complex issue to address when collective bargaining agreements are involved.

Employers of unionized workplaces that do not want to see their drug testing programs go up in smoke should consider these tips when implementing drug-free workplaces.

Consider whether the company has a duty to negotiate with the union

Under Federal law, employers of unionized workplaces are required to bargain with unions in good faith regarding wages, hours, and other terms and conditions of employment, such as drug testing which typically affects a term or condition of employment. As a general rule, a unionized employer first must negotiate with the union before changing terms or conditions of employment for existing employees represented by the union.

Failing to bargain when legally required to do so could result in the union taking economic action (a walkout, boycott, etc.) or filing an unfair labor practice charge against the employer. If the union prevails with such a charge, an employer may be required to reinstate employees with backpay who were terminated pursuant to a drug testing policy that was not properly negotiated.

However, in some instances and depending on the language of the collective bargaining agreement—including any management rights clause—an employer may be able to unilaterally implement or revise a drug/alcohol policy. Conversely, in other instances, a unilateral change could be an unfair labor practice. Therefore, employers seeking to roll out new or revised drug testing policies should first obtain a legal opinion to determine whether they are first required to bargain with the union about such changes.

If required to negotiate a drug/alcohol policy, watch your language!

The language of a negotiated collective bargaining agreement will govern a unionized workplace, including permissible adverse actions an employer may take against employees testing positive for marijuana. Proper drafting of the agreement is therefore important. For example, using vague language or including unnecessarily restrictive terms could impede an employer’s ability to enforce a drug-free workplace.

Employers should strategically craft the language of the agreement. Carefully tailoring each provision of the agreement is key to having the employer, not the union, manage and control workplaces.

Consider effective negotiation tactics

Employers of unionized workplaces should be prepared to negotiate terms of the collective bargaining agreement, including, in some instances, drug-free workplace policies.

To effectively negotiate, employers should assemble a negotiation team to implement a strategic negotiation plan. An effective team may include key personnel that understand the workplace and the goals to be achieved. For example, a frontline supervisor, human resources representative, and operations executive may be great members of the strategic negotiation team. An employer’s labor law attorney will also be an essential member of the negotiation team to ensure that current laws are followed and terms of the agreement are properly drafted.

Once a team is assembled, the team may wish to prioritize desired terms for negotiation. Part of the bargaining process may require a little give and take. Thus, employers should prioritize which terms are “non-negotiables” and which terms are flexible. Reviewing your drug testing policy and its intended purpose ahead of negotiations will help determine which parts of your drug testing programs are imperative to business operations. For example, randomized testing may be vital to business operations if employing individuals in safety sensitive positions.

Bottom line

Union presence does not have to be a total buzz kill. Recognizing the high stakes, employers of unionized workplaces should take full advantage of the collective bargaining process to negotiate effective drug testing programs that help to keep workplaces safe.