FMLA

The Department of Labor ("DOL") released it 2012 budget, setting forth a $12 billion discretionary budget authority  and aims increase enforcement of the Fair Labor Standards Act ("FLSA") and Family and Medical Leave Act ("FMLA").

The DOL's Wage and Hour Division ("WHD') is seeking $237.7 million and 1,839 full-time equivalent employees.  The DOL said it wants an increase of $6.4 million and 57 full-time equivalent employees to support greater enforcement of the FLSA's overtime provisions and the FMLA.

Additionally, the WHD seeks $3.8 million and 35 full-time workers for increased enforcement on the worker misclassification front. Overall, the 2013 budget proposal calls for some $14 million to fight misclassification, including $10 million for grants for states, according to the DOL.

The Occupation Safety and Health Administration's ("OSHA") proposed 2013 budget requests $565.5 million and 2,308 workers, representing a small increase — $680,470 and three employees — from the budget enacted in fiscal year 2012.

The Equal Employment Opportunity Commission ("EEOC") is seeking a $373.7 million budget for the 2013 fiscal year, up from $360 million in 2012.

 

The federal judge presiding over the FedEx Ground Package System Inc. (“FedEx Ground”) multidistrict litigation (“MDL”) ruled this week that classes of FedEx Ground drivers in numerous states are independent contractors, not employees. In re MDL-1700 FedEx Ground Package Sys. Inc., Employment Practices Litig., No. 3:05-MD-527 RM (MDL 1700) (N.D. Ind. Dec. 13, 2010) (“Dec. 13, 2010 Order”).   

The court’s decision comes on the heels of its August 11, 2010 ruling that a class of Kansas drivers are independent contractors, not employees, under the Kansas Wage Payment Act. See In re MDL-1700 FedEx Ground Ground Package Sys. Inc., Employment Practices Litig., No. 3:05-MD-527 RM (MDL 1700), 2010 WL 3239363 (N.D. Ind. Aug. 11, 2010) (“August 11, 2010 Order”).  Following that ruling, the Court instructed the parties to file supplemental briefing explaining whether the Court should reach the same result – on claims under the laws of other relevant States relating to overtime, business expense deductions from wages, late payment of wages, meal-and-rest breaks, and similar wage-related statutory and breach-of-contract claims – in the MDL’s many other collected cases in which similar summary judgment motions regarding drivers’ employee-vs.-independent-contractor status were awaiting decision. 

The MDL consists of numerous class action cases filed by drivers against FedEx Ground in courts around the country that were combined for coordinated pre-trial proceedings in the U.S. District Court for the Northern District of Indiana in 2005.  In general, the cases allege that FedEx Ground drivers were improperly misclassified as independent contractors, and that the drivers were therefore covered by state and federal laws applicable to employees.  Some of the cases also alleged violations of federal law, including the FLSA and the FMLA, and common law causes of action for breach of contract.  Eventually, at least 56 separate putative class actions from 40 states were transferred to the Northern District of Indiana as part of the MDL.  In 2008 and 2009, the MDL court certified some of the cases as class actions and declined to certify others.  The parties then proceeded to file summary judgment motions on the issue of the drivers’ employee-vs.-independent-contractor status.  The Court’s ruling this week represents the latest stage of the litigation.

In its August ruling in the Kansas case, the Court summarized its conclusion that drivers were independent contractors as follows:

The plaintiffs have all signed Operating Agreements labeling themselves as independent contractors, they can hire others to perform their assigned work and go work for another delivery company, and they can sell their routes to other qualified drivers; yet, they contend they are employees.  The court sees it differently. Upon review of the evidence in the light most favorable to the plaintiffs, the only reasonable inference is that FedEx hasn’t retained the right to direct the manner in which drivers perform their work. FedEx supervises the drivers’ work and offers numerous suggestions and best practices for performance of assigned tasks, but the evidence doesn’t suggest that FedEx has the authority under the Operating Agreement to require compliance with its suggestions. Further, other factors strongly weigh in favor of independent contractor status; in particular, the parties intended to create an independent contractor arrangement, the drivers have the ability to hire helpers and replacement drivers, they are responsible for acquiring a vehicle and can use the vehicle for other commercial purposes, they can sell their routes to other qualified drivers, and FedEx doesn’t have the right to terminate contracts at-will. Although some facts weigh in favor of employee status, after considering all the relevant factors, the court finds that the plaintiffs are independent contractors as a matter of law.

See Aug. 11, 2010 Ruling at 3.  In this week’s decision, the court repeated this same passage (beginning with “Upon review of the evidence…”).  See Dec. 13, 2010 Ruling at 11-12 (quoting Aug. 11, 2010 Ruling at 3). 

In the vast majority of states involved (AL, AZ, AR, CA, FL, GA, IN, KY, LA, MD, MN, NH, NJ, NY, NC, OH, OR, PA, RI, SC, TN, TX, UT, WV, WI, in addition to KS), the MDL court this week ruled that drivers were independent contractors under each respective state’s legal test. The Court’s detailed reasoning, state by state, is set forth on pages 18-176 of the decision.

The Court noted (at 4-5) that in arriving at both the Kansas decision and this week’s decision, it “has considered evidence common to the drivers’ relationships with FedEx on a nationwide basis:  the Operating Agreement [lease] and generally applicable Policies and Procedures.  As a condition of class certification, the court excluded particularized evidence of actual control between FedEx and the drivers. …These cases might or might not come out differently under a different procedural posture allowing wider scope for review of extrinsic and particularized evidence, but that situation is not before the court today.” 

The Court denied the plaintiffs’ request to give preclusive effect – that is, to treat as already having decided the issue – the California Court of Appeal’s decision in Estrada v. FedEx Ground Package System, Inc., 64 Cal. Rptr. 3d 327 (Cal. Ct. App. 2007) that a FedEx Ground Single Work Area (“SWA”) class of drivers were employees.  The Court stated (at 8): “The facts before the Estrada court and those before this court are dissimilar insofar as the facts available to this court don’t go beyond the Operating Agreement and generally applicable Policies and Procedures…. Also, the SWA class in Estrada was markedly different from the classes before this court because the MDL classes lump together SWA and MWA drivers.  Thus, though the parties litigated a right to control issue in Estrada, the issue decided in Estrada, isn’t identical to issue before this court.”

The Court also rejected the plaintiffs’ assertion that it viewed as dispositive the Operating Agreement’s indication that the parties intended to create an independent-contractor relationship.  The Court said (at 10) that “the intent factor weighed ‘strongly’ because the intent expressed in the contracts was so clear, not because the intent factor had special status or carried dispositive weight.”

The Court went on to declare (at 10-11, citations omitted) that “Most important in Kansas – and the most important under the common law and Restatement tests generally – is the right to control, which typically is the weightiest factor….  This court held that there was no reasonable inference that FedEx retained the right to control the methods and means of the drivers’ work on a class-wide basis. This finding came in light of the distinction between control of means and control of results.  In most states, control of results doesn’t indicate employee status; control of means used to achieve contracted-for results does indicate employee status.  Drawing the line between means and results is a challenging, highly contextual and fact-specific task.  Bright-line rules prove elusive here.  This court held that the controls reserved to FedEx were results-oriented:   FedEx provides work to and pays contractor-drivers to provide the specific result of timely and safely-delivered packages to FedEx customers.  The totality of the circumstances and review of all the relevant facts and factors led to this results-oriented conclusion.”

The Court further explained (at 11) that it “found the drivers’ entrepreneurial opportunities to be highly probative of independent contractor status.”

The drivers are expected to appeal the court’s ruling.  
 

The Ninth Circuit on Monday affirmed a lower court's grant of summary judgment to Dollar Tree in a lawsuit brought by former employee  who was given less paid leave than she requested in order to tend to her ailing mother, saying the company was not a successor to her previous employer and she had not worked at Dollar Tree long enough to be eligible for leave under the FMLA.

The question of when a new employer is a successor-in-interest to a former employer under the statute had only been addressed by a handful of district courts.  The definition matters because an employee is not eligible for the protections of the FMLA until he has worked for a particular employer for at least 12 months, the Ninth Circuit's opinion stated.

According to the Ninth Circuit's ruling, Dollar Tree opened its store after four weeks of renovations and hired Sullivan and only one other former Factory 2-U employee to work there after Sullivan filled out a job application.

Considering Sullivan's appeal, the Ninth Circuit weighed the eight factors laid out by the Department of Labor to determine whether a company is a successor-in-interest under the law.

The court concluded that some factors slightly suggested successorship, but that on balance the factors strongly demonstrated that, as a matter of law, Dollar Tree was not a successor-in-interest to Factory 2-U — noting that when it opened its store Dollar Tree brought in many of its own employees, trained employees in its own methods, changed the plaintiff’s job title and responsibilities and brought in all new inventory.

Taking into account the regulatory factors as a whole, the interests of the plaintiff and Dollar Tree and the policy goals of the FMLA, the appeals court found that Dollar Tree is not a successor-in-interest to Factory 2-U, and upheld the summary judgment ruling.

The U.S. Department of Labor recently issued an Administrator's Interpretation that expands employees’ entitlement to leave under the Family and Medical Leave Act (“FMLA”).  The FMLA grants up to 12 weeks of job-protected unpaid leave per 12-month period to certain employees in companies that have 50 or more employees working within a 75-mile radius of the work site.  Under Administrator’s Interpretation No. 2010-3, covered employees eligible for leave under the FMLA now include those employees who assume the role of caring for a child, even if no legal or biological relationship exists between the employee and the child. 

The interpretation, made for the purpose of clarifying the term “son or daughter” under the FMLA, came after what the DOL called “several requests for additional guidance” to the Wage and Hour Division as to whether an employees without a biological or legal relationship with a child may take FMLA leave for birth, bonding, or to care for the child.  In answering the question affirmatively, the DOL attempted to clarify the circumstances that should be considered when determining whether an employee stands in the position of a parent, otherwise known as “in loco parentis.”  The interpretation makes clear that, for the purposes of the FMLA, even the existence of a biological parent in the child’s home will not prevent a finding that the child is still the son or daughter of an employee who has no biological or legal relationship with the child, if the employee intends to assume the responsibilities of a parent. 

The DOL stated “It is the Administrator’s interpretation that the regulations do not require an employee who intends to assume the responsibilities of a parent to establish that he or she provides both day-to-day care and financial support in order to be found to stand in loco parentis to a child.”  The full text of Administrator’s Interpretation No. 2010-3 is available at http://www.dol.gov/whd/opinion/adminIntrprtn/FMLA/2010/FMLAAI2010_3.htm.