Wage & Hour Class And Collective Action Review – 2025

The potential impact of the Loper Bright decision on the FLSA cannot be overstated. For decades, the U.S. Department of Labor (DOL) has enforced the FLSA and other wage and hour laws through extensive regulations. Those regulations enjoyed considerable deference under Chevron , and the Loper Bright decision threatens to upend long-standing FLSA regulations. The effect of Loper Bright on the FLSA is already being felt, as demonstrated by a recent decision by the Fifth Circuit invalidating an FLSA regulation regarding tip credits. In 2021, the DOL published the 80/20 Rule, a proposed regulation that established limits on the amount of time employers may require tipped employees to perform non-tipped work and still pay the lower tipped minimum wage. Under the Rule, an employer will lose the tip credit if an employee spends (i) more than 20% of their workweek on non-tipped duties or (ii) more than 30 continuous minutes per shift on non-tipped duties. In 2021, organizations representing national and local restaurant associations commenced litigation against the DOL in the U.S. District Court for the Western District of Texas seeking to permanently enjoin the DOL’s enforcement of the Rule. In July 2023, the district court in Restaurant Law Center v. U.S. Department of Labor applied Chevron deference and upheld the 80/20 Rule as a reasonable exercise of the DOL’s rulemaking authority under the FLSA. The restaurant associations appealed the decision to the Fifth Circuit. On August 23, 2024, the Fifth Circuit in Restaurant Law Center, et al. v. United States Department Of Labor, 120 F.4th 163 (5th Cir. 2024), vacated the DOL’s 80/20 Rule pursuant to Loper Bright . The Fifth Circuit noted that the 80/20 Rule was inconsistent with the statutory text of the FLSA because it impermissibly “disaggregates the component tasks of a single occupation” and thus “applies the tip credit in a manner inconsistent with the FLSA’s text.” Id. at 175. Citing Loper Bright and noting the existence of the 80/20 standard since 1988, the Fifth Circuit nonetheless was “not persuaded that the 80/20 standard, however longstanding, can defeat the FLSA’s plain text.” Id. Loper Bright is likely to augur substantial changes to the FLSA in 2025 and beyond. There are signs that the Supreme Court, may be inclined to closely examine or strike down existing FLSA regulations in a post- Loper Bright world. Last year, the Duane Morris Class Action Review covered how the Supreme Court’s decision in Helix Energy Solutions Group, Inc. v. Hewitt, et al. , 598 U.S. 39 (2023) established that highly-compensated employees cannot be paid a daily, hourly, or shift basis and satisfy the FLSA’s “salary basis” test. The dissent from Justice Kavanaugh, however, noted that the Supreme Court’s holding relied on the FLSA regulations and those “regulations themselves may be inconsistent with the Fair Labor Standards Act.” Id. at 67 (Kavanaugh, J., dissenting). Because the relevant FLSA statutory language regarding exemptions “focuses on whether the employee performs executive duties, not how much an employee is paid or how an employee is paid,” Justice Kavanaugh concluded that it was “questionable whether the Department’s regulations — which look not only at an employee’s duties but also at how much an employee is paid and how an employee is paid — will survive if and when the regulations are challenged as inconsistent with the Act.” Id. The implicit invitation to issue such a challenge, coupled with the demise of Chevron deference in Loper-Bright , may very well result in changes to longstanding regulations that are inconsistent with the statutory language of the FLSA in the coming years. 1. Some Progress Amongst General Reluctance To Adopt The Swales Or Clark Standards Recent years brought a shift away from the traditional two-step approach to conditional certification of an FLSA collective action in the Fifth and Sixth Circuits. In 2024, defendants in FLSA actions routinely advocated for courts outside of those jurisdictions to adopt the heightened Swales or Clark standards at the conditional certification stage. With limited exceptions, courts outside of the Fifth and Sixth Circuits were reluctant to jettison the traditional two-step approach. Courts within the Eleventh Circuit may be the most fertile ground for adoption of the Swales standard. In Hipp, et al. v. Liberty National Life Insurance Co ., 252 F.3d 1208 (11th Cir. 2001), the Eleventh Circuit characterized the two-stage approach as “an effective tool for district courts to use in managing these often complex cases” and suggested that courts adopt the standard, though it noted that “[n]othing in our circuit precedent, however, requires district courts to utilize this approach” and §216(b) certification “remains soundly within the discretion of

Made with FlippingBook - professional solution for displaying marketing and sales documents online