A lawsuit was filed seeking to invalidate the Fair Labor Standards Act (FLSA) overtime rule for executive, administrative, and professional employees scheduled to take effect on July 1st. The U.S. Supreme Court ruled that the Federal Arbitration Act prohibited federal courts from dismissing a lawsuit while claims are being arbitrated. A bill has been introduced in the Senate to protect warehouse workers. The Equal Employment Opportunity Commission filed 15 lawsuits against companies that have failed to file the required EEO-1 report.
Lawsuit Challenging FLSA Overtime Rule Filed – Business groups have filed a lawsuit seeking to enjoin the Fair Labor Standards Act (FLSA) overtime rule for executive, administrative and professional employees that was finalized recently by the Department of Labor (DOL). The rule would increase the salary basis threshold in two steps effective July 1, 2024, to $844/week or $43,888 per year and to $1,128/week or $58,656 per year effective January 1, 2025. The current salary basis threshold is $684/week or $35,568/year. The rule also provides for adjustments to the salary basis threshold every three years starting on July 1, 2027.
This case, Plano Chamber of Commerce, et. al v. Julie Su, Acting Secretary of Labor, et. al was filed in the US District Court for the Eastern District of Texas, the same court that in 2017 enjoined permanently a 2016 rule that would have increased the salary basis threshold. In that case, the District Court decided that the Department of Labor was increasing the minimum salary level to a level that “essentially makes an employee’s duties, functions or tasks irrelevant if the employee’s salary falls below the new minimum salary level.” The District Court also concluded that the salary basis threshold could not be increased every three years without providing notice and an opportunity for public comment.
The lawsuit alleges that the DOL rule contains salary basis thresholds that far exceed its statutory authority and violates the Administrative Procedure Act by failing to justify the policy change, not considering reasonable alternatives, and not considering the strong interests of those employers impacted by the rule. The lawsuit predicts that as a result of this rule, “Millions of employees across the country will have to be reclassified from salaried to hourly workers, resulting in restricted work hours that will deny them opportunities for advancement and hinder their job performance—to the detriment of their employers, their customers, and their own careers.” Due to the July 1st effective date, the plaintiffs are seeking expedited review by the court.
Supreme Court Rules That Courts Cannot Dismiss Cases Subject to Arbitration – By unanimous decision, the United States Supreme Court ruled that where a claim is subject to arbitration, the Federal Arbitration Act (FAA) prohibits federal courts from dismissing the case until the arbitration is completed. Justice Sotomayor who wrote the opinion, in the case of Smith v. Spizzirri concluded “When a federal court finds that a dispute is subject to arbitration, and a party has requested a stay of the court proceeding pending arbitration, the court does not have discretion to dismiss the suit on the basis that all the claims are subject to arbitration.”
This case was brought by current and former delivery drivers for an on-demand delivery service. They allege that they were misclassified as independent contractors and were not paid minimum wage and overtime in violation of federal and state employment laws. The parties agreed that all the claims were subject to arbitration. The District Court dismissed the case, and the Ninth Circuit Court of Appeals affirmed the dismissal believing that Section 3 of the FAA gave the District Court discretion to dismiss the case. The Supreme Court agreed to review the case to resolve a split among the judicial circuits.
The Supreme Court noted that Section 3 of the FAA provides that, “when any issue in a suit is subject to arbitration, the court shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement…” The Supreme Court believed that the use of the words “shall” and “stay” in Section 3, “overrides any discretion a district court might otherwise have had to dismiss a suit when the parties have agreed to arbitration.”
Warehouse Worker Protection Act Introduced – Senator Edward Markey (D-MA) along with 3 cosponsors has introduced the Warehouse Worker Protection Act (S. 4260), which would, according to the sponsors of the legislation, “prohibit dangerous quotas, including those that rely on constant intrusive surveillance, interfere with workers’ ability to use the bathroom and take guaranteed breaks, violate health and safety laws, or prevent workers from exercising their right to organize.” The bill has been referred to the Senate Committee on Health, Education, Labor, and Pensions.
The bill would prohibit quotas that would prevent compliance with required meal or rest periods, health and safety provisions, the use of bathroom facilities, the right to reasonable accommodation or that sets performance targets that measure total output over an increment that is shorter than one day. Employers would have to provide employees with at least one 15 minute paid rest break for every 4 hours of work. Employers would be required to provide employees with a written description of each quota to which employees are subject that includes the number of tasks to be performed or materials to be produced, any potential discipline or adverse employment action that could result from failure to meet the quota, how the targets are calculated, and how performance quotas are monitored. Employers would have to provide employees with written notice regarding how employees failed to meet work performance requirements.
EEOC Sues Employers for Failing to File EEO-1 Form – The Equal Employment Opportunity Commission (EEOC) has sued 15 employers for repeatedly failing to submit the mandatory EEO-1 data reports in prior years, including 2021 and 2022. Employers with at least 100 employees are required to submit workforce data annually to the EEOC that includes workforce information by job category and sex, race, and ethnicity. Section 709 of Title VII of the Civil Rights Act of 1964 authorizes the collection of workforce data and also authorizes the EEOC to sue to ensure compliance. According to EEOC Chair Charlotte A. Burrows, “The data helps the agency focus its resources, identify potential discrimination, and refine its investigations.” The EEO-1 reports for the 2023 reporting cycle were due by June 4th.
Neil Reichenberg is the former executive director of the International Public Management Association for Human Resources. He is an attorney, a frequent writer and speaker on public policy and human resource issues and was an adjunct faculty member at George Mason University. For questions or additional information, contact Reichenberg at neilreichenberg@yahoo.com.