Most Important Wage Cases in 2017

I pass along Reuter Legal’s list of top five wage cases of 2017 (with my brief comments).

Number 1: Overtime Rule Struck Down:

A federal judge struck down an Obama administration rule that would have made more than 4 million workers eligible for mandatory overtime pay. (The biggest losers in this group are employees who have quasi-management responsibilities— shift supervisors, store managers, etc.— who often work more than 40 hours a week. Now they will lose overtime pay, and be scheduled over 40 hours per week with no extra pay.)

Number 2: New Legal Test for “Contract Employees.” Lots of firms lease employees, or take on work performed by the main employer as contractors. Example: In this case, a drywall contractor “subbed” the job to a different firm that performed drywall installation. In these situations, the sub-contractor sometimes fails to pay overtime or minimum wages. A federal court (Fourth Circuit) set forth a new test to determine if the employees of the contractor company is, in effect, an employee of the primary organization. The panel of judges said a fundamental question is whether the companies jointly decide the terms and conditions of employment. That shared control can be direct or indirect, formal or informal, the panel said. (This is a win for employees, but will be challenged before the Supreme Court. Many other industries are affected: cable TV and internet installers, home nurses, delivery drivers and couriers, and a growing number of professional work groups, e.g., “contract” lawyers and doctors and other health professionals.)

Number 3: Salary History Case (Involving Gender Discrimination): Employers sometimes ask applicants or new hires for their salary history. (This is one reason that pay for women consistently lags about 20% behind pay for men in identical jobs.) Initially, the 9^th Circuit Court of Appeals found no bias when employers ask for salary history. But later in 2017, it said it will reconsider this ruling. (Federal courts have split on this issue. Perhaps in 2018, the Supreme Court will decide the matter.)

Number 4: Franchise Employees Get Paid: A federal court in California approved a $3.75 million deal between McDonald’s and about 800 employees of a California franchisee who said the company was jointly liable for wage-and-hour violations. (The key here is that company is paying for violations committed by franchise owners. These are not company-owned restaurants. The ruling was based on a potent state wage-and-hour law, not a federal law, so this outcome is beyond the reach of the Trump administration.)

Number 5: Uber Drivers Allowed to Sue as a Group (Class Certification): Uber wanted to force drivers into arbitration, where their wage claims would be handled individually. A federal court rejected Uber’s case for arbitration. (Now the matter will proceed in open court, where a class of Uber drivers will get a better chance of winning or negotiating a settlement.)