Employment Law U8

C h A P T E R 20

Occupational Safety and Health

Observing that increased responsibilities and anemic staffing have hampered Uncle Sam’s ability to protect workers, President Barack Obama pledged in the first months of his presi- dency to step up federal enforcement of workplace safety. Obama’s first budget, released in late February 2009, and passed in substantial part in early April 2009, increased funding to the Occupational Safety and Health Administration (OSHA). “For the past eight years, the department’s labor law enforcement agencies have struggled with growing workloads and shrinking staff,” the 134-page budget proposal said. ‘The presi- dent’s budget seeks to reverse this trend, restoring the department’s ability to meet its respon- sibilities to working Americans under the more than 180 worker protection laws it enforces.” The funding increase was aimed at enabling OSHA to “vigorously enforce workplace safety laws and whistleblower protections, and ensure the safety and health of American workers,” according to the White House document. (The extra money also was intended to beef up enforcement of wage and hour regulations and to enforce equal opportunity aspects of federal contracting.) On October 20, 2011, then Secretary of Labor Hilda L. Solis issued the following statement: “We are encouraged by the reported decline in incidence rates for workplace injuries and illnesses, which is reflective of the joint effort of government, business, unions and other organizations. Nevertheless, 3.1 million injuries and illnesses in the work- place is too high. Serious injuries and illnesses can knock a working family out of the middle class. Workers should not have to sacrifice their health and safety to earn a paycheck. “We remain concerned that more workers are injured in the health care and social assistance industry sector than in any other, including construction and man- ufacturing, and this group of workers had one of the highest rates of injuries and illness at 5.2 cases for every 100 workers. The Department of Labor’s Occupational Safety and Health Administration will continue to work with employers, workers and unions in this industry to reduce these risks. “Illness and injury rates for public sector workers also continue to be alarm- ingly high at 5.7 cases for every 100 workers, which is more than 60 percent higher than the private sector rate. We must continue to work with state and local govern- ments to ensure the safety of our public employees.

“A report like this also highlights the importance of accurate record keeping. Employers must know what injuries and illnesses are occurring in their workplaces in order to identify and correct systemic issues that put their workers at risk. We are concerned with poor record-keeping practices and programs that discourage workers from reporting injuries and illnesses. That’s why OSHA is working hard to ensure the completeness and accuracy of these data, which are compiled by the nation’s employers. “As our economy continues to rebound and grow, we must ensure that safety and health are a part of that growth. Let’s all remember that no job is a good job unless it is also a safe job.”1 Twenty-four states have accepted Congress’s invitation to enact their own workplace safety programs, leaving it to the federal agency to try to oversee safety in the remaining 26, plus the American territories—notably Puerto Rico, the Virgin Islands, and Guam. Federal funding assistance for the state-run OSHA programs dramatically trails inflation, rising only about 1 percent in the aggregate since 2001.

The WORKING Law

Occupational Safety and Health Administration (OSHA) Enforcement The Occupational Safety and Health Administration’s (OSHA) mission is to pro- mote and to assure workplace safety and health, and to reduce workplace fatali- ties, injuries and illnesses. With over four decades of working to ensure safe and healthy workplaces, OSHA has continually served a vital role in assuring safe and healthful working conditions for men and women. Since the passage of the OSH Act of 1970, workplace deaths have fallen nearly 65 percent and occupational injury and illness rates have dropped 67 percent. OSHA continues to respond to new challenges from emerging industries, new technologies, and an ever-changing workforce by uti- lizing strategic mechanisms such as Site Specific Targeting (SST), National Emphasis Programs (NEPs), the Severe Violator Enforcement Program, and Corporate Settlement Agreements. OSHA Inspection Activity In FY 2013 OSHA conducted 39,228 total inspections. This number includes 185 sig- nificant and egregious (instance-by-instance) enforcement actions. In addition, OSHA con- ducted 22,170 programmed inspections. These inspections indicate that OSHA devoted more resources to proactively target the industries and employers that experienced the greatest number of workplace injuries and illnesses. OSHA also conducted 17,058 unprogrammed inspections, including employee complaints, injuries/fatalities, and refer- rals. Fatality inspections decreased by 8.2 percent in FY 2013.

20-1 Part 4 Employment Law Issues Policy and Processes of the Occupational Safety and health Act

The Occupational Safety and Health Act (OSH Act) was enacted by Congress in 1970. The statute has two broad goals: • To ensure safe and healthful working conditions for working men and women • To provide a framework for research, education, training, and information in the field of occupational safety and health The act requires employers to furnish their employees a workplace that is free from recog- nized hazards that cause, or are likely to cause, serious injury or death. A recognized hazard is one that is known to be hazardous, taking into account the standard of knowledge of the industry. The act also requires that employers meet the various health and safety standards set under the act and keep records of injuries, deaths, accidents, illnesses, and particular hazards. The Occupational Safety and Health Act applies to all employees who work for an employer that is engaged in a business affecting interstate commerce. This broad cover- age reaches almost all employers and employees in the United States and its territories, with some exceptions. The act does not apply to the federal and state governments in their capacity as employers, nor does it apply to domestic servants or self-employed persons. The act contains no specific industry-wide exemptions. However, if other federal agen- cies exercise statutory authority to prescribe or enforce standards or regulations affecting occupational safety or health, the Occupational Safety and Health Act does not apply. For this exemption to operate, it must be shown that the working conditions of the affected employees are covered by another federal statute that has the protection of employees as one of its purposes. The other agency must also have exercised its jurisdiction to make regulations or standards applying to specific working conditions that would otherwise be covered by the act. An example of such a situation involves the workers on offshore oil plat- forms. Their working conditions were governed by health and safety regulations enacted and enforced by both the U.S. Coast Guard and the U.S. Geological Survey. In Marshall v. Nichols,2 the court held that the Occupational Safety and Health Administration was pre- cluded from exerting its jurisdiction over offshore oil platforms because of the coverage by the Coast Guard and the Geological Survey.

20-1a Administration and Enforcement The Occupational Safety and Health Act created three federal agencies for administration and enforcement. The Occupational Safety and Health Administration (OSHA) is the pri- mary agency created for enforcement of the act. An independent agency within the Depart- ment of Labor, it has the authority to: • promulgate standards; • conduct inspections of workplaces; • issue citations for violations; and • recommend penalties.

OSHA acts on behalf of the Secretary of Labor. The National Institute of Occupational Safety and Health (NIOSH) is an agency created to conduct research and promote the application of the research results to ensure that no worker will suffer diminished health, reduced functional capacity, or decreased life expectancy as a result of his or her work experience. The Occupational Safety and Health Review Commission (OSHRC) is a quasi-judicial agency created to adjudicate contested enforcement actions of OSHA. Whereas OSHA may issue citations and recommend penalties for violations of the act, only OSHRC can actually assess and enforce the penalties. The decisions of OSHRC can be appealed to the U.S. courts of appeals. OSHRC has three members appointed by the president for overlapping six-year terms and a number of administrative law judges who have career tenure. Standards, Feasibility, and Variances To reach the goal of providing hazard-free workplaces for all employees, the act provides for the setting of standards regulating the health and safety of working conditions. The Secretary of Labor is granted authority under the act to promulgate occupational safety and health standards through OSHA. The act provides for the issuance of three kinds of stan- dards: interim standards, permanent standards, and emergency standards. • Interim standards are those that the Secretary of Labor had power to issue for the first two years following the effective date of the act. These standards were generally mod- eled on various preexisting industry consensus standards. The Secretary, in adopting previously accepted national consensus standards, was not required to hold public hear- ings or any other formal proceedings. • Permanent standards are both newly created standards and revised interim standards. These standards are developed by OSHA and NIOSH and are frequently based on suggestions made by interested parties, such as employers, employees, states and other political subdivisions, and labor unions. The Secretary of Labor is also empow- ered to appoint an advisory committee to assist in the promulgation of permanent standards. This committee has 90 days from its date of appointment, unless a longer or shorter period is prescribed by the Secretary, to make its recommendations re- garding a proposed rule. After OSHA has developed a proposed rule that promulgates, modifies, or revokes an occupational safety or health standard, the Secretary must publish a notice in the Federal Reg- ister. Included in this notice must be a statement of the reasons for adopting a new standard, changing an existing standard, or revoking a prior standard. Interested parties are then allowed 30 days after publication to submit written data, objections, or comments relating to the pro- posed standards. If the interested party files written objections and requests a public hearing concerning these objections, the Secretary must publish a notice in the Federal Register specify- ing the time and place of the hearing and the standard to which the objection has been filed. Within 60 days after the expiration of the period for comment or after the completion of any hearing, the Secretary must issue a rule promulgating, modifying, or revoking the standard or make a determination that the rule should not be issued. If adopted, the rule must state its effective date. This date must ensure a sufficient period for affected employers and employees to be informed of the existence of the standard and of its terms.

The Secretary of Labor may, under special circumstances, avoid the procedures just described by issuing temporary emergency standards. These standards are issued when the Secretary believes that employees are exposed to grave dangers from substances or agents determined to be toxic or physically harmful. Actual injury does not have to oc- cur before a temporary emergency standard can be promulgated, although there must be a genuinely serious emergency. • Emergency standards take effect immediately upon publication in the Federal Register. After publication, the Secretary must then follow the procedure for formally adopting a permanent standard to make the emergency standard into a permanent standard. That new permanent standard must be issued within six months after its publication as an emergency standard. Appeals of Standards After a standard has been promulgated by the Secretary, any per- son adversely affected by it can file a challenge to the validity of the standard. Such chal- lenges must be filed with the appropriate federal court of appeals before the 60th day after the issuance of the standard. Upon reviewing the standard, the court of appeals will uphold the standard if it is sup- ported by substantial evidence. The Secretary must demonstrate that the standard was in response to a significant risk of material health impairment. Feasibility The act grants the Secretary authority to issue standards dealing with toxic materials or harmful physical agents. A standard must be one that most adequately ensures, to the extent feasible and on the basis of the best available evidence, that no employee will suffer material impairment of health or functional capacity, even if the employee has regular exposure to the hazard. The feasibility of a standard must be examined from two perspec- tives: technological feasibility and economic feasibility. Further, OSHA can force an indus- try to develop and diffuse new technology to satisfy precise permissible exposure limits to toxic materials or harmful physical agents that have never before been attained, if OSHA can present substantial evidence showing that companies acting vigorously and in good faith can develop the technology. The standard also must satisfy the requirement of economic feasibility. Burden of Proof The Secretary must carry the burden of proving both technological and economic feasibility when promulgating and enforcing standards governing toxic materi- als and harmful physical agents. However, the Secretary does not have to establish that the cost of a standard bears a reasonable relationship to its benefits, as established in the case of American Textile Mfr.’s Inst. v. Donovan.3 In general, the Secretary bears the burden of proving by “substantial evidence on the record considered as a whole” that the cited employer violated the act. The prima facie case which the Secretary must prove to make an OSHA citation “stick” is well illustrated in the following case.

CaSe 20.1 Chao v. Gunite Corp. 442 Fed.3d 550 (7th Cir. 2006)

After issuing a number of citations against Gunite Corporation for violations of occupational safety and health regulations, the Secretary of Labor failed to convince the Occupational Safety and Health Review Commission to uphold four of the charges. The Secretary has petitioned this court to reverse the Commission’s decision. We con- clude that the Secretary is correct: the Commission’s deci- sion is not supported by substantial evidence in the record and therefore the case must be remanded to the agency with instructions to affirm the citations. I Gunite’s foundry in Rockford makes brakes and wheels for heavy trucks. Its process involves melting scrap iron and then pouring the molten iron into molds created from a mixture of sand, clay, and water. The molds then pass along a series of interconnecting conveyor belts that transport and cool the iron pieces. As they move along the conveyer belts, the cast- ings are shaken from the molds; in the process, dust containing respirable silica becomes airborne. The amount of this dust is enormous; the process uses some 400 tons of sand per hour. Breathing silica is dangerous for the foundry’s workers, as it can lead to silicosis, a deadly disease that primarily affects the lungs. The Occupational Safety and Health Administration (OSHA) has accordingly set ceilings called permissible exposure limits, or PELs, on the amount of silica that may be present in the air. Gunite’s foundry was built in the first half of the twen- tieth century. From the start, it has been plagued with the problem of controlling the amount of silica dust escap- ing into the air. In 1977 and again in 1981, OSHA cited Gunite for violations of the silica PEL. That problem has intensified since the installation of the conveyer belt system in 1989. The plant manager described the initial installa- tion of the conveyor belts as “a disaster.” In order to con- trol the airborne dust, the plant first tried spraying water to keep the dust down. When that failed to make a difference, Gunite installed covers over the conveyer belts. They too were ineffective, even though they were still being used sev- eral years later when OSHA entered the picture. In 1990, one of Gunite’s insurers reported that employee exposure to silica exceeded a different measure, the “threshold limit value” set by the American Conference of Governmental Industrial Hygienists. Two upgrades later, Gunite still had too much silica in the air. Another insurer measured the air four times between June 1996 and March 1998 and found that foundry employees—including those at the positions listed in the citations at issue before us—were being exposed to levels of respirable silica in excess of OSHA’s PEL. That insurer, Kemper-NATLSCO, recommended in 1996 that Gunite require its employees to wear individual respirators until the company could implement feasible engineering and administrative controls to limit employee exposure. Gunite seems to have ignored that recommendation; two reports from Kemper-NATLSCO in 1997 indicated that employees still were not being required to wear the indi- vidual respiratory protection. In 1996 and 1997, Gunite recorded three cases of silicosis in its OSHA logs. Gunite itself describes its efforts to deal with excess silica from 1991 through 1998 as involving four major engineering projects that together were intended to bring the foundry into com- pliance with the silica PEL and other federal regulations. The last of these, installation of new covers and a ventila- tion system over the conveyor belts, was planned and being implemented in 1998 during the OSHA inspection, though it did not become fully functional until March 1999. Since 1971, OSHA regulations have required facilities with excess respirable silica to use engineering or administrative con- trols “whenever feasible” to attain compliance with the PEL. Only when feasible engineering or administrative controls are insufficient to bring silica levels below the PEL may a company turn to individualized protective equipment to supplement those controls. This “hierarchy of controls” privileges engineer- ing and administrative controls because they “make respiratory protection automatic, while respirators are dependent on use and constant attention and are subject to human error.” The OSHA inspection leading to the citations involved in the Secretary’s petition took place between May and October of 1998. During the inspection, OSHA repre- sentatives took samples that showed that workers in four positions at the foundry were exposed to about 1.6 times the PEL for respirable silica in an eight-hour shift. OSHA assigned three members of its Health Response Team (HRT) to Gunite’s case and asked them to evaluate Gunite’s admin- istrative and engineering controls. The HRT came up with a list of proposed administrative and engineering controls that it concluded would alleviate the airborne silica problem. The team based its recommendations for engineering controls “on general principles of ventilation and industrial hygiene which have been shown to be effective in reducing contami- nant levels in a variety of industries.” One control measure highlighted in the report was the use of “clean air islands,” which are devices that blow clean air at the at-risk employ- ees; the fresh air creates a bubble around each employee that does not contain dangerous levels of silica. Other measures on the list included installing physical barriers to block the areas where the most dust was kicked up into the air and improving housekeeping and maintenance. Finally, the report mentioned the new system of covers for the conveyor belts that Gunite was in the process of implementing dur- ing the OSHA inspection, although it opined that the new system would solve the problem for only three of the four employee positions that were overexposed to silica. Based on its investigation of the foundry, the Secretary issued three citations containing various items, each alleging violations of federal regulations. Among those were six items based on the sampling results and the HRT’s report alleg- ing that Gunite had committed serious and willful violations of 29 C.F.R. § 1910.1000(c) (the air contaminant regula- tion) by exposing employees to respirable silica in amounts in excess of OSHA’s PEL and of 29 C.F.R. § 1910.1000(e) by failing to implement feasible engineering or administra- tive controls. Another item alleged a violation of 29 C.F.R. § 1910.134(e)(4) (1997) by failing to inspect to ensure proper respirator use. The Secretary also alleged a willful violation of 29 C.F.R. § 1910.95(g)(6) for failure to obtain annual audiograms. Of these charges, only four are at issue in this petition: items 8a and 8b of citation 1, which charge serious violations of § 1910.1000(c) and(e) for overexposing three “mold station” workers (a metal pourer, coreset/blowoff operator, and mold line technician) to respirable silica and for failing to determine and implement feasible administra- tive or engineering controls to achieve compliance with the PEL; and items 3a and 3b of citation 2, which charged will- ful violations of the same standards for overexposing a sprue pulloff operator, who works at a different location in the fac- tory closer to the finishing process. Gunite appealed the citations, contending before the administrative law judge (ALJ) that it should not be liable because it was already implementing a new system designed to alleviate the respirable silica problem and because of the availability of individual respirators, which it contended both alleviated overexposures and qualified as an administra- tive control. In the pre-hearing documents made part of the record by the ALJ, the Secretary designated two members of the HRT team—industrial hygienist Keith Motley and mechanical engineer Lee Hathon—as experts. They were expected to testify about their qualifications, their observa- tions of Gunite’s foundry, and “administrative and engineering controls to reduce respirable silica” for the locations identified as having overexposures, as well as the contents of the HRT report. Motley’s expertise included 12 years of experience as part of the HRT responsible for addressing respirable haz- ards, while Hathon had served 10 years on the HRT and had participated in investigations “at several foundries and other industries where airborne silica is a hazard.” Gunite objected to both Motley’s and Hathon’s testimony about actual silica levels as “not probative of exposures of the cited employees to the cited levels of respirable silica dust.” Nevertheless, Gunite did “not deny that [Motley’s and Hathon’s] opinions are probative relative to the question of engineering controls for some of the cited work areas,” although the company reserved the right to disagree substantively with their opinions “in some respects.” At the hearing, the parties stipulated to the admission of the HRT report and agreed that the Secretary would not call the HRT members for direct examination, leaving their testimony in the form of the report itself and other pre-hearing filings made part of the administrative record. The Secretary, how- ever, planned to and did present them for cross-examination. Both Motley and Hathon were cross-examined about their qualifications, about their preparation of the HRT report, and about the recommended engineering controls. Motley testified about his tour of the plant, during which he was able to observe first hand the problem areas and ventilation systems. When he asked to see the plans for the new ventilation system, he was shown the actual parts that Gunite was putting in place. Motley also described the team’s particular recommended solutions to the airborne silica problem, including a way generally to filter the plant’s air before recirculating it. He explained how clean air islands work and how they might alleviate the problems. Hathon’s testimony was similar. After answering questions about his own training and credentials, Hathon testified that he had previously examined at least seven foundries similar to Gunite’s in terms of size, age of the building, and products produced; that he had toured the areas of Gunite’s foundry with overexposures; and that the HRT report was designed specifically to address the problems of the Gunite foundry. Another witness, Julia Evans, an OSHA compliance offi- cer, testified that an administrative control such as employee rotation likely would have eliminated the overexposure. Evans also testified that Gunite’s planned improvements likely would solve the silica problem at three of the four employee stations. Finally, Gunite’s own witness, Leroy Cator, the 50-year veteran employee in charge of the abatement process, testi- fied that “[c]lean air islands are probably effective and I don’t question that.” However, he also said that they are difficult to implement because of temperature control issues, and that they had not been recommended by the outside engi- neers working with Gunite. Instead, those engineers recom- mended systemic approaches that would improve the air for many employees rather than individualized approaches. He admitted, however, that clean air technology was used elsewhere in the foundry, near the pouring line. The ALJ affirmed the four citations (as well as the others not at issue here), finding that “except for clean air islands, Gunite has not challenged [the HRT’s] recommendations.” The ALJ also found that Gunite’s future plans to solve the problem did not relieve the company of liability. Likewise, the use of respirators did not alleviate Gunite’s obligation to implement systemic administrative or engineering controls that would make individual respirators unnecessary. Gunite appealed the ALJ’s determination to the Com- mission, which by a divided vote affirmed some of the cita- tions, but vacated the four now before us. The majority found that the Secretary had failed to prove that the pro- posed engineering and administrative controls would pro- duce a “significant reduction” in respirable silica: The Secretary’s case for establishing technological feasibility rests primarily on OSHA’s HRT report and supporting testimony by compliance officer Evans and HRT members Lee Hathon and Keith Motley. Neither compliance officer Evans nor the HRT members were qualified as experts. The HRT report identified deficiencies in Gunite’s controls and recommended additional controls, including general ventilation to reduce plantwide levels of air contaminant and specific controls to address areas where sampling results showed employee exposure in excess of the PEL.... We conclude that the evidence of record as a whole is insuf- ficient to prove that the controls suggested by the Secretary would produce a significant reduction in airborne respirable silica in the foundry. Because neither compliance officer Evans nor any of the HRT members were presented by the Secretary as expert witnesses, the record lacks sufficient evi- dence to establish that the proposed controls were techno- logically feasible. Moreover, the testimony failed to quantify the expected or anticipated amount of silica dust reduction. At most, the HRT report provided a list of control technolo- gies for Gunite to experiment with in the hope that some of them or some combination of them would reduce employee exposure to some undefined levels. The Commission then found that because the Secretary had failed to show a tech- nologically feasible engineering control, the use of respira- tors by employees was sufficient. (Somewhat inexplicably, the Commission found that the evidence of the respirator use on the day the air was tested was sufficient to vacate those items, even though elsewhere it affirmed a separate item by finding that “Gunite’s lax enforcement of respirator use in the foundry constituted willfulness.”) The dissenting commissioner found that the HRT report was “comprehensive” and that it recommended a number of feasible administrative and engineering controls. She also concluded that the witnesses’ credentials made their testi- mony “sufficiently reliable” and that Gunite had failed to challenge the witnesses’ expertise. Furthermore, she wrote, “[T]he fact that the Secretary did not present the HRT members as experts does not diminish the probative value of their testimony.... To the extent that the majority would find dispositive the lack of ‘expert’ testimony from the Sec- retary in order to meet her burden, and since this issue has not been previously briefed, I would remand.” II This court has jurisdiction under 29 U.S.C. § 660(b) to review on the Secretary’s petition “any final order” of the Commission. The Commission’s “function is to act as a neu- tral arbiter.” Where the Commission reverses an ALJ, it is the Commission’s order alone that is reviewed. In review- ing the Commission’s conclusions in enforcement actions, we follow the dictates of the Administrative Procedure Act, 5 U.S.C. § 701 et seq., and review interpretations of law with deference to determine only whether they are “arbitrary or capricious” or contrary to law. Where, however, a dispute exists between the Secretary and the Commission about an interpretation of OSHA or regulations adopted under its umbrella, the Secretary’s interpretation is entitled to defer- ence if it “sensibly conforms to the wording and purpose” of the relevant provisions. In reviewing the facts, we uphold the Commission if its findings are “supported by substantial evidence on the record considered as a whole.” Our defer- ence to the Commission includes deference to its credibility determinations, except in extraordinary circumstances. The Secretary bears the burden of proof in demonstrat- ing the feasibility of administrative and engineering controls “when the compliance remedy is based upon a very general statutory or regulatory command that does not describe for the employer any specific methods for compliance.” As the Commission itself has noted, however, “[t]he test of whether administrative and/or engineering controls are technologically feasible is whether the controls are ‘achievable’ and capable of producing a significant reduction in exposure to air contami- nants.” Although a significant reduction is required, it is not necessary to show that the control would achieve full compli- ance. “The Secretary need not propose or prove the feasibil- ity of a detailed abatement program. [She] need only show that some controls are feasible in an employer’s plant.” There is no magic percentage of reduction that is required; all that is required is that the administrative or engineering control be systemic—so that, unlike with respirators, an individual employee’s mistake cannot eviscerate her protection—and that it produce a significant reduction in silica. In this case, the Commission found that the Secretary failed to carry her burden on feasibility, but it is hard to dis- cern why it came to this conclusion. On one reading of the opinion, it seems that the Commission might be saying that the Secretary failed either to present any evidence of feasibil- ity or that she failed to present necessary expert evidence of feasibility, and thus failed to meet her burden of proof. This, at least, is the way one might understand the portions of the Commission’s opinion stating that “neither compliance offi- cer Evans nor any of the HRT members were presented by the Secretary as expert witnesses....” and “the Secretary offered no expert testimony in attempting to meet her burden of proof.” In the alternative, the opinion might be interpreted as find- ing that the Secretary’s witnesses lacked expertise, as where the Commission writes that “[n]either compliance officer Evans nor the HRT members were qualified as experts.” Or the Commission might have been faulting the Secretary for fail- ing to jump through some procedural hoops in presenting her evidence or designating her experts. Our problem with the Commission’s opinion is twofold. First, it did not adequately explain why it concluded that the Secretary failed to satisfy her burden. It is neither proper nor feasible for us to fill in the blanks with our own guesses. Sec- ond, even if we somehow succeeded in constructing a ratio- nale for the Commission’s result, we conclude that its factual conclusions are contrary to the “substantial evidence on the record considered as a whole.” Finally, nothing in the record hints at any purely procedural failing in the Secretary’s han- dling of the case. The Commission generally follows the Fed- eral Rules of Civil Procedure, 29 C.F.R. § 2200.2(b), but it does so in a manner designed to “secure an expeditious, just and inexpensive determination of every case.” It is the role of the ALJ, among other things, to “[r]ule upon offers of proof and receive relevant evidence” and “introduce into the record documentary or other evidence”; the judge may also ask the parties to state their positions on issues. Witnesses generally must testify under oath or affirmation and must be subject to cross-examination, 29 C.F.R. § 2200.69, and the Federal Rules of Evidence govern the proceedings. Gunite has not pointed to any particular problem under those rules, and so we conclude that the Commission could not have rejected the ALJ’s opinion on this ground. The other three possibilities all, in one way or the other, attack the sufficiency of the evidence the Secretary presented to support the citations. In applying the substantial evidence rule, our point of reference is the Commission’s opinion. As we have said before, “[w]e cannot uphold a decision by an administrative agency ... if ... the reasons given by the trier of fact do not build an accurate and logical bridge between the evidence and the result.” If we interpret the Commission’s decision as holding that the Secretary utterly failed to present any evidence of feasibil- ity that could satisfy her burden of proof, we can easily reject that conclusion as contrary to the record as a whole. This would be obvious if the Secretary had presented Hathon and Motley as witnesses on direct, but the method of proceed- ing to which all parties agreed does not change the result. The parties stipulated that the HRT report would be admit- ted into evidence, and it was. Then, as agreed, the Secretary presented both Motley and Hathon for cross-examination. Their testimony on cross covered much of the same material that a direct examination normally would have covered; their credentials, their inspection of the foundry, and the basis for their report and conclusions. Furthermore, the ALJ specifi- cally made part of the record the pre-trial pleadings, which also covered much of the same ground. Even the Commission acknowledged that “Gunite challenged only the feasibility of clean air islands” and not the many other recommended con- trols, which included basic housekeeping, employee hygiene, and employee rotation. Indeed, the parties agreed that the already planned—but not implemented—improvements would significantly decrease the silica exposure for the mold- ing line employees. In the absence of any rebuttal or specific evidence about nonfeasibility from Gunite, the Secretary’s evidence is more than sufficient to carry her burden. In administrative litigation as elsewhere, if both sides agree on a matter, such as the fact that the planned changes would significantly decrease the level of silica in the foundry’s atmosphere, there is no requirement that evidence be intro- duced to support that fact or conclusion. A contrary rule would bog down the administrative process with unneces- sary evidence on uncontested facts. The feasibility inquiry is governed by “realism and common sense.” While the Com- mission majority tried to distinguish Sherwin-Williams and Castle & Cooke Foods by suggesting that expert testimony may be unnecessary only where the feasibility challenged is economic (as it was in those cases) rather than technological (as in Gunite’s case), we see no principled distinction between the two issues. “Realism and common sense” are equally applicable in both realms. If we think instead that the Commission took the posi- tion that Hathon and Motley were not experts, lacked expertise, or were somehow not properly designated as experts, that interpretation likewise collapses in the face of the record. We have said that a court excluding expert tes- timony must “articulate with reasonable specificity the rea- sons why it believes the testimony is insufficiently reliable to qualify for admission,” because otherwise the lack of such explication makes it difficult (or impossible) for us mean- ingfully to review the court’s decision. Here, the Commis- sion’s opinion suggests less an evaluation of the witnesses’ testimony and more “an utter disregard for uncontroverted sworn testimony” and other evidence presented by the Sec- retary. Especially in administrative adjudication, there is no magical set of procedures for designating someone as an expert witness. As we observed in United States v. Wil- liams, 81 F.3d 1434, 1442 (7th Cir. 1996), the “difference between an expert witness and an ordinary witness is that the former is allowed to offer an opinion, while the latter is confined to testifying from personal knowledge.” The test is whether the witness has “specialized knowledge that the lay person cannot be expected to possess” and reasonably applies that knowledge to the relevant facts. In this case, both the Secretary and Gunite recognized Hathon’s and Motley’s expertise, as Gunite admitted that their testimony would be probative on the issue of feasible engineering controls. Gunite’s argument on appeal is primarily limited to a reminder that the court should defer to the Commission’s decision when that decision is supported by substantial evidence, but its brief is remarkably short on specific evi- dence that might have supported this particular ruling. If the Commission had made a reasoned decision supported by substantial evidence in the record, we would defer to that decision, even if we ourselves might have preferred another outcome. Such deference extends to credibility determina- tions about witnesses, including expert witnesses. Nonethe- less, deference has its limits. In order for us to uphold an administrative commission’s decision, there must be “an accurate and logical bridge between the evidence and the result.” That same bridge is necessary between the evidence in the record and the credibility determination about expert testimony. The Commission’s opinion in this case does not meet those standards. No matter how we look at it, the opinion is not supported by substantial evidence. *** For these reasons, we REVERSE the Commission’s deci- sion and REMAND the case with instructions to affirm the four contested citations. Case Questions 1. Why should the Secretary of Labor bear the burden of proof in demonstrating the feasibility of administrative and engineering controls? Wouldn’t a safer workplace result from holding employers strictly liable for condi- tions that do not comply with OSHA regulations? 2. Why do you think the Commission found that the Secretary failed to carry her burden of proof on the fea- sibility of administrative and engineering controls? Do you agree with their findings? 3. Should courts second guess OSHA’s experts when it comes to determining whether unsafe conditions exist in a workplace? Or in determining the appropriate bur- den of proof to place on the Secretary of Labor, should judges defer to the agency’s judgment in these matters? Why did the court not accord the Commission such deference in this decision?

Variances If an employer, or a class of employers, believes that the OSHA standard is inappropriate to its particular situation, an exemption, or variance, may be sought. This variance may be temporary or permanent. • A temporary variance may be granted when the employer is unable to comply with a standard by its effective date because of the unavailability of professional or techno- logical personnel or of materials or equipment necessary to come into compliance with the standard. The employer must show that all possible actions have been taken to protect employees and that all actions necessary for compliance are being undertaken. A temporary variance can be granted only after the affected employees have been given notice of the request and an opportunity for a hearing. Temporary variances can be granted for a one-year period and may then be renewed for two six-month periods. • Permanent variances are granted when the employer establishes by a preponderance of the evidence that its particular procedures provide as safe and healthful a workplace as the OSHA standard would provide. The affected employees must be informed of the request for the permanent variance and may request a hearing. If the variance is granted, either the employees or OSHA may petition to modify or revoke the variance. The Secretary of Labor also has authority to issue experimental variances involving new or improved techniques to safeguard worker safety or health.

20-1b Employee Rights In addition to being granted the right to a workplace free from recognized hazards, employ- ees under the Occupational Safety and Health Act are protected from retaliation or discrim- ination by their employer because they have exercised any rights granted by the act. Section 11(c)(1) of the act provides that: No person shall discharge or in any manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be insti- tuted any proceeding under or related to this Act or has testified or is about to tes- tify in any such proceeding or because of the exercise by such employee on behalf of himself or others of any right afforded by this Act. In March 2015, the U.S. Department of Labor issued a Final Rule allowing employees to submit oral complaints of retaliation, in addition to the existing ability to submit written complaints. Employees who believe that they have been subject to retaliation for exercising their rights under OSHA must file a written or oral complaint with OSHA within 180 days of learning of the alleged retaliation. Upon receiving the complaint, OSHA begins an investiga- tion into it; the employee making the complaint must make a prima facie showing that: (1) the employee had engaged in an activity protected under OSHA; (2) the employer knew or sus- pected that the employee had engaged in protected activity; (3) the employee suffered an adverse employment action; and (4) the circumstances of the adverse employment action were sufficient to raise the inference that the protected activity was a contributing factor in the adverse action.4 If the employee makes such a showing, the employer then has the burden to demonstrate, by clear and convincing evidence, that is would have taken the same adverse action in the absence of the employee’s protected activity. OSHA is required to issue written findings as to whether there is reasonable cause to believe that the employer has retaliated against the employee within 60 days of the filing of the complaint. If OSHA finds reasonable cause, it must issue a pre- liminary order that includes all relief necessary to make the employee whole, including rein- statement. A preliminary order requiring reinstatement is effective immediately, and the reinstatement stands during the administrative appeals process. Once a preliminary order is issued, the parties to the complaint have 30 days to request a hearing before an administrative law judge (ALJ). Once the ALJ has issued a decision, the parties have 14 days to file objections with the Administrative Review Board (ARB), which then has 30 days to decide whether to grant a review. If the ARB grants a review, its decision becomes the final order, and the parties then have 60 days to seek judicial review of that order in a U.S. Court of Appeals. If no final decision has been issued after 180 days from the date the complaint was filed with OSHA, the employee may then file suit in the appropriate federal district court. In addition to protecting employees against retaliation, OSHA also gives employees the right to refuse to work in the face of a dangerous condition. Pursuant to Section 11(c)(1), the Secre- tary of Labor has adopted a regulation that protects employees from discrimination because they refuse to work in the face of a dangerous condition. The right to refuse can be exercised when employees are exposed to a dangerous condition posing the risk of serious injury or death and when there is insufficient time, due to the nature of the hazard, to resort to the regular statutory procedures for enforcement. When possible, the employees should attempt to have the employer correct the hazardous condition before exercising their right to refuse. The dangerous condition triggering the employees’ refusal must be of such a nature that a reasonable person, under the circumstances facing the employees, would conclude that there is a real danger of death or serious injury. As the following case illustrates, a worker who refuses to perform her duties does so at her own risk, and the refusal to work may or may not be found reasonable by the courts.

CaSe 20.2 herbert v. altimeter, inC. 230 Or. app. 715, 218 P.3d 542 (2009)

Facts: The defendant is a trucking company based in Eugene. The defendant hired the plaintiff as a long-haul truck driver in January 2006. Truck drivers are required to undergo a medical history examination and a physi- cal examination to receive Department of Transportation certification. The plaintiff was certified as physically fit to drive commercial vehicles at the time that she was hired by defendant. The defendant assigned her to truck number 4003. In the first week of operating her assigned truck, the plaintiff reported to Tony Note, one of defendant’s vice- presidents, that there was a noticeable smell of exhaust and oil in the cab. A number of repairs followed within the next few weeks: a flex-pipe and band clamps were replaced; a “blow by tube” was replaced (by the plaintiff herself ) to address the oil smell in the cab; two head gaskets were replaced because the gaskets were leaking either inter- nally or externally; another new flex-pipe was installed to address an exhaust leak; and an air hose and a turbo clamp were replaced to address exhaust and oil leaks. Approxi- mately two months later, on April 13, another oil leak was recorded on the truck’s maintenance log. On April 19, the plaintiff was on the road waiting to make a delivery in Arizona the next morning. The plaintiff had been idling her truck’s engine all day in order to run the air conditioner due to the extremely hot weather. She testified that the smell of exhaust in the truck was over- whelming and seemed to be causing her dog to be very lethargic. She was concerned about her health, so, in the evening, she turned off the truck to stop the exhaust smell from coming into the cab. Later, when she tried to restart the motor (in order to cool off), the starter locked up, and it was necessary for service to be called in to restart it. The service provider told the plaintiff that the starter was beginning to fail and that it probably was not a good idea to turn off the engine. The plaintiff called Tony to inform him of the problem. He advised her not to turn the motor off and to make her delivery the following morning. The following morning, the plaintiff made her Arizona delivery and picked up a new load for delivery in Nevada. Once there, as directed, she went to a truck service center to have the starter checked. While waiting at the service center, the plaintiff again kept the engine running, both to keep the cab cool and because she was worried that they might not get to it and was concerned about “whether the starter would start or not.” Earlier that day, the plaintiff had called Mike Note, the vice-president of operations, and reported that she was not feeling well—that she was nauseated, light-headed, and fatigued. When she learned from the truck service center that it would not be pos- sible to have the truck serviced until after midnight, the plaintiff called Tony and told him that she was not feeling well and did not feel that she could stay up all night wait- ing. Tony agreed that she could turn the engine off for the night and sleep. The next morning the truck started and the plaintiff delivered her load in Nevada. She spoke with Mike that morning and told him that she still was not feeling well. She testified that she felt very ill that day and that she was “gravely concerned” about her health because she was not feeling well, her dog was very lethargic, and she had been breathing the exhaust in the truck for “almost a week straight” at that point. On April 22, the plaintiff returned to Eugene. She reported the exhaust leak to Tony and turned in a repair request. Tony sent the truck to the repair shop. Although the repair personnel found no indication of problems with the starter or exhaust, Tony advised them to replace the starter and the exhaust band clamps. On the same day, on her doctor’s advice, the plaintiff had a blood test for carbon monoxide exposure. On April 24, the plaintiff’s doctor gave her a copy of the test result, which revealed a 9.6 percent level of carboxyhemoglobin. He also gave her a note indicating that her level of carboxy- hemoglobin was “consistent with excess exhaust fume expo- sure = markedly elevated!” Because 48 hours had passed since the blood draw, and the plaintiff had not been back in her truck, her doctor ordered a second blood test for comparison. After seeing her doctor, the plaintiff took the result of the first test and the doctor’s note to Mike and told him that she was concerned about her exposure to car- bon monoxide. Mike told her that she might be able to drive truck number 4010, assigned to Tony, to complete a delivery to Portland. He also told her that, if she liked that truck, he would not object if she wanted to keep it. Later that day, Tony called the plaintiff and asked her what was going on. According to the plaintiff, she had a “similar conversation” with Tony to the one that she had with Mike. In that conversation, Tony told her that “there had to be some other health issues going on” and that she was a safety risk and should not be driving. He then sus- pended the plaintiff. Also on April 24—after the exhaust band clamps on the plaintiff’s truck had been replaced—Tony arranged to have the carbon monoxide levels in the cab tested by a Eugene-area diesel mechanic, using a gas monitor bor- rowed from the Springfield Fire Department. The truck was driven for approximately 20 minutes, and the gas monitor continuously showed no carbon monoxide in the cab of the truck. The mechanic also did not smell any exhaust in the cab. On April 25, the plaintiff’s doctor received the result of the second blood test, which revealed a 7.6 percent level of carboxyhemoglobin in the plaintiff ’s blood. The plain- tiff’s doctor considered that to be a significant change and concluded that it was attributable to the fact that she had not been exposed to exhaust in her truck for two days. He wrote her a second note: “Due to exposure to engine fumes to excess in current truck[,] this patient needs to be in another rig. She has side effects including nausea, burning eyes and throat, weak- ness, muscle tingling etc.” On April 26, the plaintiff brought the second note to a meeting with Tony. Tony was upset with the plaintiff and told her that he had spent thousands of dollars on her truck, that her truck could not possibly be having exhaust problems, and that she must have some other health issues. The plaintiff asked Tony, “What’s the bot- tom line here? Are you letting me go?” He said, “Yes.” The plaintiff asked if there was another truck she could drive, to which he responded, “No.” The plaintiff took out the doctor’s second note and asked Tony if he wanted to read it, to which he also responded, “No.” Tony told the plaintiff that she “shouldn’t be driving a truck any- more” and that she was “a risk.” Tony also told the plain- tiff that a test had been performed and had revealed no carbon monoxide in the truck and that her truck’s die- sel engine did not emit carbon monoxide. At the end of their conversation, the plaintiff cleared out her truck and turned in her keys. The plaintiff initiated a complaint with the Bureau of Labor and Industries (BOLI), and defendant filed a response. The plaintiff later dismissed the BOLI complaint and then initiated this civil action. In her complaint, the plaintiff alleged in four counts that her termination con- stituted an unlawful employment practice. Each count advanced a different legal theory of discrimination: retali- ation for complaining about unsafe working conditions (OSHA retaliation); retaliation for invoking the workers’ compensation system; retaliation for requesting a reason- able accommodation under the disability discrimination statutes; and perceived disability discrimination. At trial, the plaintiff testified to the events described above and reported that her symptoms had dissipated a few days after she stopped driving truck number 4003. She also testified that, although she is a heavy smoker, she had never experienced similar symptoms associated with smoking. The plaintiff offered expert testimony from a diesel mechanic. He testified that exhaust leaks around the flex- pipe and band clamps are very common in the trucking industry, that exhaust leaks can be very hard to find and remedy, and that such leaks can create a risk of carbon monoxide poisoning. He further testified that a review of truck 4003’s maintenance log showed that an exhaust problem was reported before the plaintiff began working for defendant; specifically, that the truck had a “big exhaust leak” in October 2005. In November 2005, a flex-pipe and the head gaskets were replaced. The witness also stated that carbon monoxide is emitted by diesel engines as a result of incomplete combustion. He noted a report of white smoke associated with truck 4003 in May 2005, which, he testi- fied, could be caused by incomplete combustion. The plaintiff called Tony as a witness. He testified that he was aware that a safety regulation required that he take a truck offline and repair it if it leaked carbon monoxide into the cab. He acknowledged that the plaintiff filled out a maintenance request for an exhaust leak before she was ter- minated. He stated that he felt that the plaintiff could not safely drive any truck until the cause of her symptoms was determined, treated, and alleviated. He confirmed that the truck had had an exhaust leak in 2005, before the plaintiff ’s employment began. He testified that the plaintiff ’s employ- ment “concluded” when they reached an “impasse over whether or not she would be allowed to drive another truck versus checking out the cause of her symptoms and treat- ment for them.” He further testified that he did not follow the plaintiff ’s doctor’s advice because the plaintiff ’s truck did not emit carbon monoxide and, therefore, the truck could not have been the source of the plaintiff’s health problems. He acknowledged that he could have requested an independent fitness-for-duty exam for the plaintiff but did not do so. The plaintiff also offered at trial defendant’s response to her BOLI complaint. Written by Tony, it stated that, among other reasons, the plaintiff’s “employment was ter- minated as a result of [h]er insistence that the employer assign her to another truck and complete disregard for all the reasons why this was neither necessary nor possible.” At the close of the plaintiff’s case-in-chief, defendant moved for a directed verdict on all four counts in the com- plaint. The trial court, without elaboration, granted the motion and dismissed the complaint. Issue: Was the plaintiff’s termination a retaliatory discharge? Decision: Thecourtpickedthroughtheplaintiff’sargu- ments, beginning with her count concerning OSHA retali- ation. ORS 654.062(5) provides that it is an unlawful employment practice to retaliate against an employee who has opposed any practice forbidden by the Oregon Safe Employment Act or makes a complaint related to that act. The plaintiff argued that she presented sufficient evi- dence that she was terminated because she complained to her employer about an exhaust leak and carbon mon- oxide poisoning. Specifically, she argued that the evidence showed that, shortly before she was terminated, she com- plained about an exhaust leak, reported her symptoms, and provided the test results and her doctor’s notes, all of which indicated carbon monoxide poisoning. The defendant responded that the plaintiff failed to introduce any evidence showing that the defendant termi- nated her because she made the safety complaint. The defen- dant cited the evidence that, after the plaintiff reported a possible exhaust leak, the defendant inspected the truck, sent it to a repair shop for further inspection and repairs, and had it tested for carbon monoxide emissions, implying that the defendant was responsive to the plaintiff’s com- plaint and thus would not have terminated her in retaliation for it. The defendant contended further that, during the plaintiff ’s conversations with Tony on April 24 and 26, in which the plaintiff was suspended and then terminated, her complaints about the exhaust leak were never mentioned. Although the evidence on which the defendant relied supported an inference that a jury would be entitled to draw, it is not the only reasonable inference to which the record gives rise. The plaintiff introduced evidence that she was terminated within a few days of reporting what she believed to be an unsafe working condition that was affect- ing her health. She also offered evidence that the defen- dant was unhappy with the plaintiff because her repair requests were costing the defendant thousands of dollars. Together, those facts were considered by the court to con- stitute circumstantial evidence that the defendant had an impermissible retaliatory motive in terminating the plain- tiff’s employment. A jury could reasonably have found that the plaintiff’s decision to report an unsafe work environ- ment was a substantial factor in her termination. Thus, concluded the court, the trial court erred in granting the defendant’s motion for a directed verdict on the count con- cerning OSHA retaliation.

Even where the employee has a legitimate reason for refusing the work order, the rem- edy for illegal discipline may be delayed so long that it is mooted for all practical purposes. Some union critics have criticized the lengthy procedures involved in resolving a complaint under Section 11(c), and suggest that if more than one employee was involved in the safety- related activity, they may get the matter resolved sooner by contacting the National Labor Relations Board. The United States is not the only nation that attempts to afford workers this right of refusal. Other industrialized nations may have better approaches to the problem. In Can- ada, occupational safety and health is a matter of provincial rather than federal law; the Province of Ontario, for example, has adopted a fairly detailed approach, which is embod- ied in the following employer’s policy.

cArltOn univerSity’S POlicy

Work Refusal Procedures The Occupational Health and Safety Act of Ontario provides employees the right to refuse work for safety reasons. These procedures follow the requirements of the Act. Right to Refuse Work Under the Occupational Health and Safety Act, a worker may refuse to work or do particular work if he/she has reason to believe that, Any equipment, machine, device or thing he/she is to use or operate is likely to endanger himself/herself or another worker. The physical condition of the workplace in which he/she works or is to work is likely to endanger himself/herself. Any equipment, machine, device or thing he/she is to operate or the physical con- dition of the workplace in which he/she works is in contravention of the Act and such contravention is likely to endanger himself/herself or another worker. Procedures for Work Refusal First Stage Refusal (a) Upon refusing to do unsafe work, the worker must immediately report the circum- stances of the refusal to the supervisor. The supervisor should contact the Depart- ment of University Safety. (b) The supervisor must immediately investigate the report in the presence of the worker and a worker representative from the [Joint Occupational Health and Safety Committee]. The worker representative must be made available and must attend the investigation without delay; time spent by this representative is deemed to be work time, for which the person shall be paid at his/her regular or premium rate, as may be proper. If these workers are not available, a worker selected because of his/her knowledge, experience and training should be called. The worker representatives from the Joint Occupational Health and Safety Committee to be contacted for a work refusal are the certified members: Colleen Neely, CUASA 520-2600 ext. 8198 Troy Giles, Physical Plant 520-2600 ext. 3668 (c) Until the investigation is completed, the worker must remain in a safe place near the work station. (d) During the investigation, supervisors must record as many details as possible regarding the refusal, using the attached Employer’s Report. (e) The Ministry of Labour is only called if the refusal progresses to the second stage. Second Stage Refusal (a) If the worker is dissatisfied with the results of the investigation and has reasonable grounds to believe that the circumstances are still such that the work is dangerous, then he/she may continue to refuse to work. (b) Upon the continuance of the worker’s refusal to work, the supervisor should notify the Department of University Safety, who will immediately notify a Ministry of Labour Officer. Until the ministry is notified, the work cannot be reassigned to another worker and the worker must remain near the work station. (c) The Ministry of Labour Officer will investigate the work refusal in the presence of the employer, the worker and the worker’s representative. (d) Pending the investigation and decision of the officer, (i) The worker must continue to remain at a safe place near the work station dur- ing his/her normal working hours unless the supervisor assigns the worker reasonable alternative work during those hours, or, if such an assignment is not practicable, the supervisor may give the worker other directions (which may include being sent home). (ii) No other worker shall be assigned to the work that is being investigated unless that worker has been advised of the other worker’s refusal and reasons for it, in the presence of the worker representative, and has signed a statement of being advised of the refusal. (e) Supervisors must take great care that they do not intentionally penalize any worker for exercising, or seeking to exercise their rights under the Act. (f) After the investigation, the officer will decide whether the machine, device, thing or workplace is likely to endanger the worker or another person. This decision will be given in writing, as soon as practical, to the employer, the worker and the worker’s representative. (g) If the inspector does not consider the refusal to be based on reasonable grounds, the worker is expected to return to work. If, however, the worker maintains that he/she has reasonable grounds for refusing such work, the inspector cannot order a return to work. If, however, no reasonable grounds exist for such further refusal, the worker may be subject to disciplinary action by the employer. Employer Reprisals Prohibited If a worker has acted in compliance with the Act, its regulations or an order made under them, the employer (or any person acting on its behalf) may not, because the worker so acted, (a) Dismiss or threaten to dismiss the worker; (b) Discipline or threaten to discipline the worker; (c) Impose any penalty on the worker; (d) Intimidate or coerce a worker. If a worker complains that the employer (or a person acting on its behalf) has improperly taken any of these actions, he/she may file a grievance. Work refusals can be avoided with a workplace commitment to health and safety, advising workers of hazards, providing safety training, and keeping the lines of com- munication open to encourage an atmosphere where workers feel free to raise health and safety concerns at any time, knowing management will treat them seriously. Supervisor Notification to Human Resources and University Safety Before imposing discipline or sending workers home during or after a work refusal, supervisors must consult with the Director of Human Resources and the Director of University Safety.

20-1c Inspections, Investigations, and Record keeping OSHA’s occupational safety and health standards are enforced through physical inspections of workplaces. Practical realities in enforcing the act have forced OSHA to prioritize the inspection process. Thus, inspections are targeted in the following order: • first to the investigation of complaints of imminent danger, • then to investigation of fatal and catastrophic accidents, • then to investigation of complaints filed by employees alleging hazardous working conditions, • then to investigation of high-hazard industries, and finally • random general investigations. Reporting and Record-keeping Requirements OSHA relies on several sources of information to determine when and where inspections will occur. First, employers with eight or more employees are required under the act to keep records of and to make periodic reports to OSHA on occupational injuries and illnesses. As of January 1, 2015, employers must notify OSHA within 24 hours of an employee suffer- ing a serious injury that involves an amputation, the loss of an eye, or any incident resulting in at least one employee being admitted to a hospital for in-patient care. Employers must report any employee fatality within eight hours. States that operate their own state OSHA programs are required to adopt the new reporting requirements by January 1, 2016. Occu- pational injuries must be recorded if they involve or result in: • death; • loss of consciousness; • medical treatment other than minor first aid; • one or more lost workdays; • the restriction of work or motion; or • transfer to another job. Second, the employer is required to maintain accurate records of employee exposures to potentially toxic materials or harmful physical agents required to be monitored under the act. Third, any employee or representative of an employee who believes that a violation of a safety or health standard exists that threatens physical harm, or believes that an imminent danger exists, may request an inspection. Inspections The compliance officer conducting the inspection may enter without delay and at reason- able times any factory, business establishment, construction site, or workplace covered by the act. This inspection may include all pertinent conditions, structures, machines, appa- ratus, devices, equipment, and materials on the inspection site. The office is also given authority to question privately any employer, owner, operator, agent, or employee. The act allows the employer and a representative authorized by the employees to accompany the inspector during the physical inspection of the work site. In Marshall v. Barlow’s Inc.,5 the Supreme Court held that an employer subject to an OSHA inspection may insist upon a search warrant. As a result of Marshall v. Barlow’s, the compliance officer now must request permission to enter the workplace or other area that is to be the subject of the search. If the employer refuses entry or forbids the continuation of an inspection, the compliance officer must terminate the inspection or confine it to those areas where no objection has been raised. Following such a refusal, an ex parte application for an inspection warrant can be obtained from either a U.S. district judge or a U.S. magistrate.

ethical diLEmmA

WHen tHe OSHA inSPectiOn findS tHAt tHe endAngered WOrkerS Are illegAlly in tHe u.S. A story appeared in the national newspaper USA TODAY on June 7, 2006, regard- ing the vital, but illegal, immigrant workers who labored on post–Hurricane Katrina reconstruction in New Orleans. A study conducted by professors at Tulane University and the University of California at Berkeley found that the workers were distinctly vul- nerable to exploitation due to their illegal status. Despite the fact that under federal labor law illegal workers are to be afforded the same protections as their legal counterparts, these illegal workers often worked in unsafe conditions without the benefit of safety gear and typically earned much less—$6.50 less on average—than documented workers performing the same duties. Immigrant workers can, however, sue their employers regardless of their legal status. • Do you agree that illegal immigrant workers should receive the same protections under the federal Occupational Safety and Health Act as American workers and legal immigrants? • If OSHA inspects a site for safety violations and the inspector suspects that illegal workers are employed at the site, should she or he be required to report this suspi- cion to the U.S. Immigration and Customs Enforcement (ICE) agency? • What if the OSHA inspection was prompted by a call or complaint from one of the illegal workers? Does this change your answer? Sometimes the legitimacy of the inspection becomes entwined with the even knottier question of jurisdiction. In the following case, the question of jurisdiction is raised in rela- tion to OSHA regulations on vertical tandem lifts. The National Maritime Safety Associa- tion makes the argument that OSHA’s authority is limited to requiring, not prohibiting, workplace practices, and furthermore that the Occupational Safety and Health Act made an unconstitutional delegation of power to OSHA.

CaSe 20.3 national maritime Safety aSS’n v. oCCupational Safety & health... 649 F.3d 743 C.a.D.C. (2011), cert. denied, 132 S.Ct. 1960 (april 16, 2012)

On December 10, 2008, the Occupational Safety and Health Administration (OSHA), an agency of the United States Department of Labor, published a final rule regulat- ing vertical tandem lifts (VTLs). The National Maritime Safety Association (NMSA), a trade association representing marine terminal operators, petitions for review of the VTL Standard and argues, among other claims, that OSHA’s authority is limited to requiring, not prohibiting, workplace practices; and if the Standard is otherwise valid, the Occupa- tional Safety and Health Act (OSH Act or Act) has made an unconstitutional delegation of legislative power to OSHA. I. On September 16, 2003, OSHA issued a notice of proposed rulemaking announcing its intention to regulate VTLs. The proposed rule would have permitted VTLs of two con- tainers with a total weight (including cargo) of 20 tons. It would have prohibited platform containers with upright end frames from being lifted in a VTL unit but would have allowed empty platform containers with the end frames folded down to be lifted as a VTL unit. It would have also imposed a wind speed restriction on VTL operations and would have required the employer to examine the interbox connectors before each use. After receiving comments and holding public hearings, OSHA published the final VTL Standard in 2008. Like the proposed rule, the Standard permits only two-container VTL lifts. Unlike the proposed rule, however, the Standard permits VTLs of empty containers only so that a two-con- tainer VTL can have a mass at most of approximately 9200 kg or 9.2 metric tons. Further departing from the proposed rule, the final Standard categorically bans VTLs of platform containers. The Standard additionally requires “that inter- box connectors and containers, including, in particular, their corner castings [connection points], ... be inspected immediately before being used in a VTL” despite OSHA’s acknowledgment that this requirement “may make ship-to- shore VTLs impractical.” Finally, the Standard imposes a “safe work zone” requirement, which requires the employer to “establish a safe work zone within which employees may not be present when vertically connected containers are in motion.... sufficient to protect employees in the event that a container drops or overturns.” As discussed more fully below, OSHA also determined that “unregulated VTL operations” pose a “significant risk” to worker safety. NMSA petitioned for review of the Standard on Febru- ary 6, 2009. *** C. “Safe Work Zone” Requirement The “safe work zone” requirement directs the employer to “establish a safe work zone within which employees may not be present when vertically connected containers are in motion.” The safe work zone must be “sufficient to protect employees in the event that a container drops.” If an employer establishes a safe work zone as the Standard requires, the NMSA asserts, employees will not face any danger and the Standard’s other requirements are there- fore not “reasonably necessary or appropriate” to protect worker safety. According to the NMSA, OSHA has a duty to explain why it did not simply “adopt the ‘safe work zone’ requirement without some or all of the other requirements in the VTL Standard.” The NMSA further argues that, because employees are not at risk when an employer com- plies with the safe work zone requirement, OSHA lacks jurisdiction to impose additional requirements because no risk to employees remains. The NMSA is mistaken. While the safe work zone requirement adequately protects employees located on the ground, it does not necessarily protect the crane operator who moves the containers. If a container were to separate during a VTL, the separation could jar the crane and injure the operator. The safe work zone requirement, therefore, does not make the VTL Stan- dard’s other requirements unnecessary or inappropriate and we believe OSHA has supported the requirement with substantial evidence. D. OSHA’s Authority to Prohibit Workplace Practices The NMSA takes issue with OSHA’s statement in the VTL Standard that it “permits VTLs of no more than two empty containers.” OSHA, according to the NMSA, lacks statu- tory authority to permit or ban workplace practices, argu- ing that OSHA can regulate only how workplace practices are performed, not what workplace practices are performed. OSHA’s unquestioned authority to ensure safe workplace practices, however, includes the authority to prohibit unsafe practices. OSHA might be stymied in its responsibility to require certain practices if it could not also prohibit non- compliant practices. E. Non-Delegation Challenge The United States Constitution vests “[a]ll legislative Powers herein granted ... in a Congress of the United States.” The Constitution “permits no delegation of those powers, and so ... when Congress confers decisionmak- ing authority upon agencies Congress must lay down by legislative act an intelligible principle to which the per- son or body authorized to act is directed to conform.” In Benzene, the Supreme Court interpreted the OSH Act to require OSHA, before issuing a standard under the Act, to “determine that [the standard] is reasonably necessary and appropriate to remedy a significant risk of mate- rial health impairment.” The limiting construction was necessary because a plurality of the Court believed that without the construction “the statute would make such a sweeping delegation of legislative power that it might be unconstitutional.” That the Court did not invalidate the Act manifests that the Court believes the Act, as interpreted in Benzene, contains an intelligible principle for promulgating health standards. But here the NMSA challenges, as an unconstitutional delegation of legis- lative power, the Act’s grant of authority to issue safety standards. The delegation of power to OSHA under the OSH Act to set health or safety standards that are “reasonably neces- sary or appropriate to provide safe or healthful employ- ment and places of employment,” is no broader than other delegations that direct agencies to act in the “public interest,” e.g., Nat’l Broad. Co. v. United States, 319 U.S. 190, 215–16, 63 S.Ct. 997, 87 L.Ed. 1344 (1943) (inter- nal quotation marks omitted), or in a way that is “fair and equitable,” Yakus v. United States, 321 U.S. 414, 420–23, 64 S.Ct. 660, 88 L.Ed. 834 (1944), or in a manner “req- uisite to protect the public health,” Whitman, 531 U.S. at 472–76, 121 S.Ct. 903 (internal quotation marks omitted), or when “necessary to avoid an imminent haz- ard to the public safety,” Touby v. United States, 500 U.S. 160, 163, 165, 111 S.Ct. 1752, 114 L.Ed.2d 219 (1991) (internal quotation marks omitted). See also Am. Power & Light Co. v. SEC, 329 U.S. 90, 104, 67 S.Ct. 133, 91 L.Ed. 103 (1946) (authorizing SEC to reorganize corpo- rate structures to ensure they are not “unduly or unneces- sarily complicate[d]” and do not “unfairly or inequitably distribute voting power among security holders” (internal quotation marks omitted)); Michigan Gambling Opposi- tion v. Kempthorne, 525 F.3d 23, 30–31 (D.C. Cir. 2008) (authorization to obtain land “for Indians” contains intel- ligible principle), cert. denied, 555 U.S. 1137, 129 S.Ct. 1002, 173 L.Ed.2d 293 (2009). See generally Whitman, 531 U.S. at 472–76, 121 S.Ct. 903.” In light of these precedents, one cannot plausibly argue that [29 U.S.C. §652(8)’s “reasonably necessary or appropriate to provide safe or healthful employment and places of employment”] standard is not an intelligible principle.” Touby, 500 U.S. at 165, 111 S.Ct. 1752. Accordingly, we reject the NMSA’s non-delegation challenge. III. For the foregoing reasons, we deny the NMSA’s petition for review in large part, finding that Congress presented intel- ligible principle to warrant delegation of power to OSHA. Case Questions 1. Why is the NMSA incorrect in its claim that OSHA does not have the power to prohibit workplace prac- tices? Do you agree with the court’s reasoning? 2. The NMSA argued that because employees are not at risk when an employer complies with the safe work zone requirement, OSHA lacks jurisdiction to impose additional requirements because no risk to employees remains. Why is this line of reasoning incorrect? 3. The court found that Congress presented intelli- gible principals to warrant the delegation of power to OSHA. Do you agree? Why? Why not?

20-2 Citations, Penalties, Abatement, and Appeal

When an inspection leads to the discovery of a violation of a standard under the act, the employer is issued either a written citation describing the particular nature of the violation or a notice of de minimis violations. A de minimis violation is one that has no direct or immediate relationship to the health or safety of the workers or the workplace affected, and no citations or proposed penalties are issued. If a citation is issued, the employer must be notified by certified mail within a rea- sonable time, but in no event longer than six months after the identification of the vio- lation, of any proposed penalty to be assessed. The employer then has 15 working days within which to notify OSHA that it intends to contest the citation or the proposed penalty. If the employer does not contest, the citation becomes final and is not subject to appeal or review. The citation must set a reasonable time for the abatement of the violation, usually not to exceed 30 days. The employer is required to post the citation, or a copy, promi- nently at or near each place the violation occurred. The employees or representatives of the employees may file a notice challenging the period of time set in the citation for the abatement. If the employer challenges the citation, the penalty assessed, or the period for abate- ment, a hearing is held before an administrative law judge, who makes findings of fact and conclusions of law that affirm, modify, or vacate the citation. This order becomes final 30 days after it is filed with OSHA unless, within that time, a member of OSHRC exercises the statutory right to direct review by the full commission. Any party to the proceeding may file a petition requesting this discretionary review. A final order of the commission may be appealed to the appropriate U.S. court of appeals. The penalty and citation may be separately challenged by the employer. However, if only the penalty is contested, the violation is not subject to review. When the citation and proposed penalty are contested, the employer has an abso- lute defense to the citation if it can prove that compliance to the standard is impossible.

A showing that the standards are merely impractical or difficult to meet will not excuse performance. In the event the violation is not corrected within the allowed time, the employer is notified by certified mail of the failure to abate and of the proposed penalty. This notice and proposed penalty are final unless, here again, the employer files a notice of contest within 15 working days. If the order is not contested, it is deemed a final order and is not subject to judicial review. If the employer has made a good-faith effort to comply with the abatement require- ments of the initial citation but the abatement has not occurred because of factors beyond the reasonable control of the employer, a petition for modification of abatement can be filed. If OSHA or an employee objects to the requested extension or modification, a hear- ing is held before OSHRC. If the employer files a petition for modification, the petition must state in detail the steps taken by the employer to abate the hazard; the additional time necessary to abate; the reasons additional time is necessary, including unavailability of techni- cal or professional personnel or equipment; and interim steps being taken to protect employees. If the employer fails to correct a cited violation after it has become final, a fine may be imposed of not more than $1,000 per day. If the violation is found to be willful or a repeat violation, or it results in the death of an employee, OSHA can impose fines of up to $70,000. In the past, OSHA had a practice of imposing a large fine and then allowing the offender to negotiate a reduction in the fine. In 1990, Congress amended the act to pro- hibit OSHA from reducing a fine for a willful violation below $7,000. The act also provides for criminal penalties of up to six months imprisonment, with the maximum increased to 12 months for a repeat violation. In his proposed budget for fiscal year 2016, President Obama asked Congress to increase the civil penalties for violations of the Occupational Safety and Health Act, not- ing that the civil penalties had been increased only once since the law was passed in 1970. The budget proposal also requested that Congress apply the Federal Civil Penalties Infla- tion Act to the OSHA civil penalties, which would adjust those penalties to keep pace with inflation.

20-2a Workplace Violence

Workplace violence has emerged as an important safety concern in the 21st century. Its most extreme form—homicide—is the second leading cause of fatal occupational injury in the United States. Every year, almost 1,000 workers are murdered and about 1.5 million are assaulted in their places of employment. Concern about workplace violence has intensified exponentially in the wake of the terrorist attacks and anthrax events of autumn 2001. Busi- nesses based primarily in office buildings, which once thought themselves above and beyond the workplace safety concerns of heavy industry and hermetically sealed from the violent intru- sions endemic to convenience food stores and other retail establishments, now find themselves in need of policies and procedures to deal with all manner of threats from inside and outside their organizations. Most large businesses have felt compelled to go so far as to develop evacu- ation plans in anticipation of the day when it is their high-rise office building or corporate office park that is the target of a terrorist attack or a biological or chemical incursion. Workplace violence can be classified as follows: • Violence by emotionally enraged persons • Violence by an angry spouse or relative of an employee • Random acts of violence • Violence against law enforcement or security • Terrorism and hate crimes Persons who commit workplace violence often share one or more of the following characteristics: • A history of violence • Psychosis • Romantic obsession • Chemical dependence • Depression • Paranoia or pathological blaming • Impaired neurological functioning • Elevated frustration with the work environment • Interest in or obsession with weapons • Personality disorder Other documented indicators of a potential for workplace violence are the following: • Alcohol abuse • Drug abuse • Impaired judgment • Emotional difficulties • Financial problems • Legal problems Strained family relations Occupational failure Threats Absenteeism Deterioration of personal appearance, attitude, and behavior Deterioration of interpersonal relations Inefficiency Documenting Behavior Incidents of workplace violence or possible violent behavior should be documented as follows: • Record incidents promptly. • Indicate date, time, and location. • Detail the behavior. • List all persons and work products involved. • Identify the performance standards and disciplinary rules violated. • Record the consequences of the action. • Record management’s response. • Record the employee’s reaction to management’s response. A Supervisor’s Response Supervisors should respond as follows to indicators of potential workplace violence: • Don’t try to diagnose the behavior personally. • Don’t discuss drinking unless it occurs on the job. • Don’t moralize. • Don’t be misled by sympathy-evoking tactics. • Don’t cover up for a friend. • Don’t put the individual into an isolated work area. • Don’t ignore the problem or the signs of trouble. • Do remember that chemical dependence is progressive and likely will only get worse over time. • Do bring to the attention of suspected employees the company’s employee assistance program. • Do make it clear that your organization is concerned with job performance and that, if performance does not improve, the job is in jeopardy. • Do explain that the employee must make the personal decision to seek help. • Do emphasize that the employee assistance program is confidential. Prevention The following should be done to prevent workplace violence: • Develop a written policy. • Form a crisis management team. • Develop policies on counseling, suspension, and termination. • Immediately investigate all incidents, such as threats. • Contact specialists for assistance. • Be flexible: Revise plans, policies, and procedures as information develops. Evacuation Plans In the words of labor lawyer Louis Lessig of the New Jersey law firm Brown & Connery, “Employers of all sizes are now drafting and revising emergency evacuation procedures. But, in order to adequately prepare, it is necessary to know in advance which employees, if any, will need assistance.”6 In line with Lessig’s observation, the EEOC recently released guide- lines concerning the creation of emergency plans that comply with the Americans with Disabilities Act. The guide lists three ways in which employers can obtain the information Lessig says they need: • The employer can ask about a new hire’s needs in this regard after making an offer of employment and prior to the commencement of work. • The employer is allowed to send out periodic surveys to all employees to ascertain such special needs; however, self-identification must be strictly voluntary and be used only in conjunction with construction of the emergency plan. • The employer may ask all employees with declared disabilities if they will require such special assistance in the event of an evacuation of the work site. Also worth noting is the ADA provision that while, in general, medical informa- tion must be maintained in confidentiality, relevant information can be provided by the employer to: • • • • Health care workers Emergency coordinators Floor captains A colleague designated to provide the special assistance required Packages and Mail In light of incidents involving the mailing of parcels or letters containing dangerous or haz- ardous substances, employers and employees should be alert to such dangers. The OSHA has issued the following guidelines.

In the wake of the many workplace-violence incidents of the past two decades, many employers have adopted “zero-tolerance policies” when it comes to worker violence or threats of violence. Other employers, perhaps subscribing to the old adage that “every dog is entitled to one bite,” will give an employee who exhibits violent or threatening behavior but does no immediate harm a second chance before terminating him. Regardless of the policy or approach, the employer faces a dilemma, because the terminated employee may be expected to challenge his firing, pointing when possible to an alleged discriminatory motive on the part of his supervisor or the company’s HR office, as exemplified by the following case.

CaSe 20.4 tomiCk v. united parCel ServiCe, inC. 511 F. Supp. 2d 235 (D. Conn. 2007)

This action arises from the events leading to Tomick’s ter- mination by UPS after nearly twenty years of employment. Counts one and two allege common law claims of negligent infliction of emotional distress and intentional infliction of emotional distress, respectively. Counts three and seven allege violations of Connecticut General Statutes §§ 31-51x and 46a-60(a)(1), respectively. The complaint alleges that in 1984 UPS hired Tomick as a driver. In January 2003, Tomick injured his back and was unable to work while recuperating from that injury. Although he was diagnosed with fifteen percent permanent partial disability, his doctor released him to return to work. UPS agreed, as part of a “reasonable accommodation,” to supply Tomick with a driver’s helper upon his return.

On December 2, 2004, which was presumably Tomick’s first day back at work, he expected a driver’s helper, but UPS did not provide one. Nevertheless, he commenced his delivery route. He began feeling “intolerable” back pain, at which point he called his wife. Thereafter he called UPS to report that he was unable to complete his delivery route. He said that he needed to see his physician, and that he was going to drive the UPS truck, which was presumably stocked with the undelivered customer packages, to his home. Tomick alleges that UPS later called his home and left a message for Tomick to return the truck that after- noon. Tomick did so, and a confrontation ensued. Tomick asked his supervisors why he was not given a driver’s helper. Trudelle accused him of acting “irrationally.” Trudelle then suggested Tomick was under the influence of drugs and alcohol and insisted that Tomick be driven immediately to a drug testing clinic and that he submit to a substance abuse test. Tomick refused to do so, and coun- tered that he needed to see his physician immediately. He attempted to leave, but Trudelle and fellow supervisor Ray Congdon prevented him from getting into his vehicle. Tomick accused Trudelle of verbally abusing his wife and threatened him. Trudelle accused Tomick of workplace violence and threatened to terminate Tomick if Tomick did not submit to an immediate fitness-for-duty observation, including a controlled substance test, at UPS’ testing facility. Tomick agreed on the condition that the test be performed at his hospital where he could simultaneously receive treatment from his physician for his back pain. Trudelle rejected this condition and terminated Tomick. Congdon inter- ceded and everyone agreed that the evaluation could be performed at Tomick’s hospital. The two men traveled together to the hospital. During the fitness-for-duty observation, the physician characterized Tomick as a “pleasant man, cooperative, and alert.” The doctor concluded that a physical drug test was unnecessary and declared Tomick fit for work. The doctor did, however, prescribe pain medication. The next day, Tomick returned to work, whereupon he was called into a meeting with Trudelle, fellow supervisor Victor Birch and union steward John Fitzgerald to discuss the events. Trudelle asked Tomick to submit to a controlled substance test. Tomick agreed. The supervisors then left the room, returned several minutes later, and fired Tomick for engaging in workplace violence the previous day. Tomick filed this action. discussion. In deciding a motion to dismiss, the allegations of the complaint are accepted as true and are construed in a light most favorable to the plaintiff. A “complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” “The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims. Indeed it may appear on the face of the pleadings that a recovery is very remote and unlikely but that is not the test.” *** IV. Perceived Disability under Connecticut General Statutes § 46a-60(a)(1) UPS asserts that Connecticut law does not recognize a claim for “perceived disability” under Connecticut Gen- eral Statutes § 46a-60(a)(1). In support, they rely on Beason v. United Techs. Corp., 337 F.3d 271, 279 (2d Cir. 2003), wherein the court unambiguously concluded “that no cause of action for perceived disability discrimination presently exists under Connecticut law.” Tomick contends that the Connecticut Supreme Court implicitly recog- nized this cause of action in Ann Howard’s Apricots Rest. v. Comm’n on Human Rights & Opportunities, 237 Conn. 209, 676 A.2d 844 (1996). In Ann Howard’s Apricots Rest., the “principal issue on appeal is whether the trial court properly determined that a hearing officer for the commission on human rights and opportunities had abused her discretion in failing to strike the direct testimony of a defendant who died before he could be fully cross-examined.” The court did not decide whether there is a cause of action in Connecticut of perceived disability discrimination. The court, did, however, discuss the hearing officer’s find- ings, which may have included a finding of perceived disability. The language on which Tomick relies is dicta. The Connecticut Supreme Court has not expanded the legisla- tively created rights codified in General Statutes § 46a-60 (a)(1), notwithstanding its recognition, stated in the form of dicta, of the limits of the law. Moreover, the Connecti- cut General Assembly has not chosen to expand those rights that act although its limitation has been pointed out by the Supreme Court. Accordingly, count seven is dismissed. iT iS SO ORdEREd. Case Questions 1. Why did Tomick’s employment discrimination claim fail? 2. Do you think Tomick might have prevailed if Con- necticut law recognized his claim? 3. Do you think the employer acted fairly in terminating Tomick’s employment?

C h a p t e r 22

The Fair Labor Standards Act

Although the Fair Labor Standards Act (FLSA) was first enacted in 1938, the issue of the minimum wage remains the subject of a current public and political campaign regarding the plight of low-paid workers. President Obama has called for the minimum wage to be raised to $10.10 per hour from the current figure of $7.25. Across the country, public demonstrations aimed primarily at fast-food employers seek to raise the prevailing wage to a “liveable wage” of $15 per hour. In response to such public pressure, McDonald’s Corp. announced on April 1, 2015, that it would raise the pay of the employees at company- owned restaurants to at least $1.00 more per hour than the local minimum wage where company-owned restaurants are located, starting on July 1, 2015. It should be noted that the pay raise announced by McDonald’s does not apply to privately owned franchises, which account for about 90 percent of the company’s more than 14,300 locations. The McDonald’s announcement came after Walmart, Target, and TJ Maxx had pledged to increase the wages of their lowest-paid employees. A number of states and some municipalities have also raised their minimum wages above the federal minimum wage. In addition to concerns about the minimum wage, there are other issues of FLSA enforcement. The U.S. Department of Labor estimates that at least 70 percent of employers are not in compliance with the FLSA. Wage and hour cases have surpassed EEO cases as the most common workplace-law class actions filed in federal courts (accounting for 6,081 suits in 2010 alone, an 18 percent increase from 2009). Wage class actions now outnumber discrimination class actions as well. Thus, the DOL has increased its number of investigators, is seeking increased funding, and now regularly pursues company-wide compliance rather than site-specific relief. Faced with such facts and figures, Americans can no longer take for granted the sanctity of the minimum wage, their entitlement to premium pay or compensatory time off for hours worked in excess of 40 per week, or that child and/or “sweated” labor is a historical artifact to be experienced only in the display cases of the Smithsonian Institution’s Museum of American History. To the contrary, a thorough understanding and appreciation of the FLSA have assumed new urgency in the new millennium.

22-1Background of the FLSa

In 1931, Congress passed the Davis-Bacon Act, which provides that contractors working on government construction projects must pay the prevailing wage rates in the geographic area, as determined by the secretary of labor. The Davis-Bacon Act is still in force The federal government attempted the general regulation of wages and hours through the National Industrial Recovery Act (NIRA). NIRA, passed in 1933, was an attempt to improve general conditions during the Great Depression. NIRA provided for the development of “codes of fair competition” for various industries. The codes, to be developed by trade associations within each industry, would specify the minimum wages to be paid, the maximum hours to be worked, and limitations on child labor. When approved by the president, the codes would have the force of law. The Supreme Court held that the NIRA was an unconstitutional delegation of congressional power in the 1935 case of Schecter Poultry Corp. v. U.S.1 In 1936, the Walsh-Healy Act was passed. Like the Davis-Bacon Act, it regulates working conditions for government contractors. The Walsh-Healy Act sets minimum standards for wages for contractors providing at least $10,000 worth of goods to the federal government. It also requires that hours worked in excess of 40 per week be paid at time- and-a half the regular rate of pay. The Walsh-Healy Act, like Davis-Bacon, is also still in force. In 1937, the Supreme Court was presented with a case that challenged the legality of a Washington state law that set a minimum wage for women. In several prior cases, the Court had held minimum wage laws to be unconstitutional, as it had done with the NIRA. Though the West Coast Hotel case is now 78 years old, the principles it enunciates are as pertinent to the body of employment law as they ever were.

CASE 22.1 West Coast Hotel Co. v. ParrisH 300 U.S. 379 (1937)

Facts: This case questioned of the constitutionality of a minimum wage law of the State of Washington. The act, entitled “Minimum Wages for Women,” authorized the fix- ing of minimum wages for women and minors. It provided: SECTION 1. The welfare of the State of Washington demands that women and minors be protected from conditions of labor which have a pernicious effect on their health and morals. The State of Washington, therefore, exercising herein its police and sovereign power declares that inadequate wages and unsanitary conditions of labor exert such pernicious effect. SEC. 2. It shall be unlawful to employ women or minors in any industry or occupation within the State of Washington under conditions of labor detrimental to their health or morals; and it shall be unlawful to employ women workers in any industry within the State of Washington at wages which are not adequate for their maintenance. SEC. 3. There is hereby created a commission to be known as the “Industrial Welfare Commission” for the State of Washington, to establish such standards of wages and conditions of labor for women and minors employed within the State of Washington, as shall be held hereunder to be reasonable and not detrimental to health and morals, and which shall be sufficient for the decent maintenance of women. The appellant was in the hotel business. The appellee Elsie Parrish was employed as a chambermaid and (with her husband) brought this suit to recover the difference between the wages paid her and the minimum wage fixed pursuant to the due process clause of the Fourteenth Amendment of the Constitution of the United States. The Supreme Court of the State, reversing the trial court, sustained the statute and directed judgment for the plaintiffs. West Coast Hotel appealed to the U.S. Supreme Court. Issue: In reviewing the case, the Court was required to revisit one of its long-standing precedents, Adkins v. Chil- dren’s Hospital,2 in which New York’s minimum wage for women had been struck down, and ask whether this case was wrongly decided and therefore ought to be overruled. Decision: The Court explained that the principle which must control its decision was the due process clause of the Fourteenth Amendment, which in effect applies the analo- gous due process clause of the Fifth Amendment (which limits the federal government) to the states. The due process violation alleged by those attacking minimum wage regula- tions for women was deprivation of freedom of contract. “What is this freedom?” the Court inquired. The Consti- tution does not speak of freedom of contract. It speaks of liberty and prohibits the deprivation of liberty without due process of law. In prohibiting that deprivation, the Consti- tution does not recognize an absolute and uncontrollable liberty. Liberty under the Constitution is subject to the restraints of due process, just as the states themselves are subject to the due process limitation on its legislation. State regulation of private enterprise, if it is reasonable in relation to its subject matter, and is adopted in the interests of the community, meets the due process standard. The Court then went on to ask, rhetorically, “What can be closer to the public interest than the health of women and their protection from unscrupulous and overreaching employers?” The answer was that the protection of women is a legitimate goal of the exercise of state power. The legislature of the state was clearly entitled to consider the situation of women in employment, the fact that they are in the class receiving the least pay, that their bargaining power is relatively weak, and that they are the ready victims of those who would take advantage of their necessitous circumstances. The legislature then was entitled to adopt measures to reduce the evils of the “sweating system,” the exploiting of workers at wages so low as to be insufficient to meet the bare cost of living, thus making their very helplessness the occasion of a most injurious competition. The legislature had the right to consider that its minimum wage requirements would be an important aid in carrying out its policy of protection. Perhaps feeling that such a “radical” (in the eyes of conservatives) decision required a “belt and suspenders,” the majority added an additional “compelling consideration,” which they said recent economic experience (i.e., the Great Depression) had brought into a strong light. The exploitation of a class of workers who are in an unequal position with respect to bargaining power and are thus relatively defenseless against the denial of a living wage is not only detrimental to their health and well-being but casts a direct burden for their support upon the community. What these workers lose in wages the taxpayers were called upon to pay through public assistance (at that time called “the dole”). The majority opinion ended by overruling an earlier case that had held that minimum wage laws violated the due process clauses and therefore were unconstitutional. “Our conclusion is that the case of Adkins v. Children’s Hospital, should be, and it is, overruled. The judgment of the Supreme Court of the State of Washington is Affirmed.”

22-2 Origin and purpose of the Fair Labor Standards act

The Schecter Poultry decision and the West Coast Hotel case were the main factors behind the FLSA. The Schecter case, which struck down the National Industrial Recovery Act, forced the federal government to attempt direct regulation of hours and wages in general. The West Coast Hotel case demonstrated that some regulation of working conditions was viewed by the Supreme Court as a valid exercise of government power. After the West Coast Hotel decision, President Roosevelt told Congress, “All but the hopelessly reactionary will agree that to conserve our primary resources of manpower, Government must have some control over maximum hours, minimum wages, the evil of child labor, and the exploitation of unorganized labor.” The FLSA was passed by Congress and signed into law on June 25, 1938. The Supreme Court held the FLSA to be constitutional in the 1941 case of U.S. v. Darby Lumber Co.3 The FLSA, as amended over the years, continues in force today. It is the essential, although unglamorous, foundation for more recent federal regulation of working conditions through OSHA, ERISA, and even ADEA. The FLSA deals with four areas: minimum wages, overtime pay provisions, child labor, and equal pay for equal work. (The Equal Pay Act is an amendment to the FLSA. See Chapter 7 for a discussion of the provisions of the Equal Pay Act.) 22-2a Coverage The FLSA, as amended, provides for three bases of coverage. Employees who are engaged in interstate commerce, including both import and export, are covered. In addition, employees who are engaged in the production of goods for interstate commerce are subject to the FLSA. The “production” of goods includes “any closely related process or occupation directly essential” to the production of goods for interstate commerce. Finally, all employees employed in an “enterprise engaged in” interstate commerce are subject to the FLSA, regardless of the relationship of their duties to commerce or the production of goods for commerce. This basis, the “enterprise” test, is subject to minimum dollar-volume limits for certain types of businesses. Employees of small employers would have to qualify for FLSA coverage under one of the other two bases of coverage. Employers and employees not covered by FLSA are generally subject to state laws, similar to the FLSA, which regulate minimum wages and maximum hours of work. In 1966, the FLSA was extended to cover some federal employees and to include state and local hospitals and educational institutions. In 1974, FLSA coverage was extended to most federal employees, to state and local government employees, and to private household domestic workers. The Congressional Accountability Act of 19954 extended the coverage of Fair Labor Standards Act to the employees of the House of Representatives, the Senate, the Capitol Guide Service, the Capitol Police, the Congressional Budget Office, the Office of the Architect of the Capitol, the Office of the Attending Physician, and the Office of Technology Assessment. The extension of FLSA coverage to state and local government employees spawned a controversy under provisions of the U.S. Constitution. In the 1976 decision of National League of Cities v. Usery,5 the Supreme Court held that federal regulation of the working conditions of state and local government employees infringed upon state sovereignty. The question was addressed again, in 1985, by the Supreme Court in Garcia v. San Antonio Metropolitan Transit Authority,6 which overruled National League of Cities, stating, “We perceive nothing in the overtime and minimum-wage requirements of the FLSA ... that is destructive of state sovereignty or violative of any constitutional provision.” One event that helped persuade the Court to overrule National League of Cities a mere nine years after it was decided was an intervening congressional amendment of the FLSA permitting states and municipalities to provide their nonexempt employees with compensatory time off in lieu of overtime pay. This FLSA amendment generated even more litigation. The Supreme Court felt compelled to speak yet again on this contentious problem of federal regulation of public employers’ wage and hour obligations. This time, the justices were asked to determine whether a public employer, faced with a potential obligation to pay off accrued compensatory time in cash, could force its employees to take time off.

CASE 22.2 CHristensen v. Harris County 529 U.S. 576 (2000)

Thomas, J. Under the Fair Labor Standards Act of 1938 (FLSA), States and their political subdivisions may compensate their employees for overtime by granting them compensatory time or “comp time,” which entitles them to take time off work with full pay. If the employees do not use their accumulated compensatory time, the employer is obligated to pay cash compensation under certain circumstances. Fearing the fiscal consequences of having to pay for accrued compensatory time, Harris County adopted a policy requiring its employees to schedule time off in order to reduce the amount of accrued compensatory time. Employees of the Harris County Sheriff’s Department sued, claiming that the FLSA prohibits such a policy. The Court of Appeals rejected their claim. Finding that nothing in the FLSA or its implementing regulations prohibits an employer from compelling the use of compensatory time, we affirm. I. A The FLSA generally provides that hourly employees who work in excess of 40 hours per week must be compensated for the excess hours at a rate not less than 11⁄2 times their regular hourly wage. Although this requirement did not initially apply to public-sector employers, Congress amended the FLSA to subject States and their political subdivisions to its constraints, at first on a limited basis, and then more broadly. States and their political subdivisions, however, did not feel the full force of this latter extension until our decision in Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528, which overruled our holding in National League of Cities v. Usery, 426 U.S. 833, that the FLSA could not constitutionally restrain traditional governmental functions. In the months following Garcia, Congress acted to mitigate the effects of applying the FLSA to States and their political subdivisions, passing the Fair Labor Standards Amendments of 1985. Those amendments permit States and their political subdivisions to compensate employees for overtime by granting them compensatory time at a rate of 11⁄2 hours for every hour worked. To provide this form of compensation, the employer must arrive at an agreement or understanding with employees that compensatory time will be granted instead of cash compensation. The FLSA expressly regulates some aspects of accrual and preservation of compensatory time. For example, the FLSA provides that an employer must honor an employee’s request to use compensatory time within a “reasonable period” of time following the request, so long as the use of the compensatory time would not “unduly disrupt” the employer’s operations. The FLSA also caps the number of compensatory time hours that an employee may accrue. After an employee reaches that maximum, the employer must pay cash compensation for additional overtime hours worked. In addition, the FLSA permits the employer at any time to cancel or “cash out” accrued compensatory time hours by paying the employee cash compensation for unused compensatory time. And the FLSA entitles the employee to cash payment for any accrued compensatory time remaining upon the termination of employment. B Petitioners are 127 deputy sheriffs employed by respondents Harris County, Texas, and its sheriff, Tommy B. Thomas (collectively, Harris County). It is undisputed that each of the petitioners individually agreed to accept compensatory time, in lieu of cash, as compensation for overtime. As petitioners accumulated compensatory time, Harris County became concerned that it lacked the resources to pay monetary compensation to employees who worked overtime after reaching the statutory cap on compensatory time accrual and to employees who left their jobs with sizable reserves of accrued time. As a result, the county began looking for a way to reduce accumulated compensatory time. It wrote to the United States Department of Labor’s Wage and Hour Division, asking “whether the Sheriff may schedule non-exempt employees to use or take compensatory time.” The Acting Administrator of the Division replied: “[I]t is our position that a public employer may schedule its nonexempt employees to use their accrued FLSA compensatory time as directed if the prior agreement specifically provides such a provision.... “Absent such an agreement, it is our position that neither the statute nor the regulations permit an employer to require an employee to use accrued compensatory time.” Opinion Letter from Dept. of Labor, Wage and Hour Div. (Sept. 14, 1992), 1992 WL 845100 (Opinion Letter). After receiving the letter, Harris County implemented a policy under which the employees’ supervisor sets a maximum number of compensatory hours that may be accumulated. When an employee’s stock of hours approaches that maximum, the employee is advised of the maximum and is asked to take steps to reduce accumulated compensatory time. If the employee does not do so voluntarily, a supervisor may order the employee to use his compensatory time at specified times. Petitioners sued, claiming that the county’s policy violates the FLSA because § 207(o)(5)—which requires that an employer reasonably accommodate employee requests to use compensatory time—provides the exclusive means of utilizing accrued time in the absence of an agreement or understanding permitting some other method. The District Court agreed, granting summary judgment for petitioners and entering a declaratory judgment that the county’s policy violated the FLSA. The Court of Appeals for the Fifth Circuit reversed, holding that the FLSA did not speak to the issue and thus did not prohibit the county from implementing its compensatory time policy. II. Both parties, and the United States as amicus curiae, concede that nothing in the FLSA expressly prohibits a State or subdivision thereof from compelling employees to utilize accrued compensatory time. Petitioners and the United States, however, contend that the FLSA implicitly prohibits such a practice in the absence of an agreement or understanding authorizing compelled use. Title 29 U.S.C. § 207(o)(5) provides: An employee ... (A) who has accrued compensatory time off ..., and (B) who has requested the use of such compensatory time, shall be permitted by the employee’s employer to use such time within a reasonable period after making the request if the use of the compensatory time does not unduly disrupt the operations of the public agency. Petitioners and the United States rely upon the canon expressio unius est exclusio alterius, contending that the express grant of control to employees to use compensatory time, subject to the limitation regarding undue disruptions of workplace operations, implies that all other methods of spending compensatory time are precluded. We find this reading unpersuasive. We accept the proposition that “[w]hen a statute limits a thing to be done in a particular mode, it includes a negative of any other mode.” But that canon does not resolve this case in petitioners’ favor. The “thing to be done” as defined by § 207(o)(5) is not the expenditure of compensatory time, as petitioners would have it. Instead, § 207(o)(5) is more properly read as a minimal guarantee that an employee will be able to make some use of compensatory time when he requests to use it. As such, the proper expressio unius inference is that an employer may not, at least in the absence of an agreement, deny an employee’s request to use compensatory time for a reason other than that provided in § 207(o)(5). The canon’s application simply does not prohibit an employer from telling an employee to take the benefits of compensatory time by scheduling time off work with full pay. In other words, viewed in the context of the overall statutory scheme, § 207(o)(5) is better read not as setting forth the exclusive method by which compensatory time can be used, but as setting up a safeguard to ensure that an employee will receive timely compensation for working overtime. Section 207(o)(5) guarantees that, at the very minimum, an employee will get to use his compensatory time (i.e., take time off work with full pay) unless doing so would disrupt the employer’s operations. And it is precisely this concern over ensuring that employees can timely “liquidate” compensatory time that the Secretary of Labor identified in her own regulations governing § 207(o)(5): “Compensatory time cannot be used as a means to avoid statutory overtime compensation. An employee has the right to use compensatory time earned and must not be coerced to accept more compensatory time than an employer can realistically and in good faith expect to be able to grant within a reasonable period of his or her making a request for use of such time.” At bottom, we think the better reading of § 207(o)(5) is that it imposes a restriction upon an employer’s efforts to prohibit the use of compensatory time when employees request to do so; that provision says nothing about restricting an employer’s efforts to require employees to use compensatory time. Because the statute is silent on this issue and because Harris County’s policy is entirely compatible with § 207(o)(5), petitioners cannot prove that Harris County has violated § 207. Our interpretation of § 207(o)(5)—one that does not prohibit employers from forcing employees to use compensatory time—finds support in two other features of the FLSA. First, employers remain free under the FLSA to decrease the number of hours that employees work. An employer may tell the employee to take off an afternoon, a day, or even an entire week. Thus, under the FLSA an employer is free to require an employee to take time off work, and an employer is also free to use the money it would have paid in wages to cash out accrued compensatory time. The compelled use of compensatory time challenged in this case merely involves doing both of these steps at once. It would make little sense to interpret § 207(o)(5) to make the combination of the two steps unlawful when each independently is lawful. III. In an attempt to avoid the conclusion that the FLSA does not prohibit compelled use of compensatory time, petitioners and the United States contend that we should defer to the Department of Labor’s opinion letter, which takes the position that an employer may compel the use of compensatory time only if the employee has agreed in advance to such a practice. [A] court must give effect to an agency’s regulation containing a reasonable interpretation of an ambiguous statute. Here, however, we confront an interpretation contained in an opinion letter, not one arrived at after, for example, a formal adjudication or notice-and- comment rulemaking. Interpretations such as those in opinion letters—like interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law—do not warrant ... deference. Instead, interpretations contained in formats such as opinion letters are “entitled to respect” ... but only to the extent that those interpretations have the “power to persuade.” As explained above, we find unpersuasive the agency’s interpretation of the statute at issue in this case. Of course, the framework of deference ... does apply to an agency interpretation contained in a regulation. But in this case the Department of Labor’s regulation does not address the issue of compelled compensatory time. The regulation provides only that “[t]he agreement or understanding [between the employer and employee] may include other provisions governing the preservation, use, or cashing out of compensatory time so long as these provisions are consistent with [§ 207 (o)].” Nothing in the regulation even arguably requires that an employer’s compelled use policy must be included in an agreement. The text of the regulation itself indicates that its command is permissive, not mandatory. As we have noted, no relevant statutory provision expressly or implicitly prohibits Harris County from pursuing its policy of forcing employees to utilize their compensatory time. In its opinion letter siding with the petitioners, the Department of Labor opined that “it is our position that neither the statute nor the regulations permit an employer to require an employee to use accrued compensatory time.” Opinion Letter. But this view is exactly backwards. Unless the FLSA prohibits respondents from adopting its policy, petitioners cannot show that Harris County has violated the FLSA. And the FLSA contains no such prohibition. The judgment of the Court of Appeals is affirmed. It is so ordered. Case Questions 1. Why do you suppose the FLSA amendment, permitting states and municipalities to give their employees compensatory time off in lieu of paying overtime pay, helped persuade the Supreme Court that the FLSA unconstitutionally infringed upon state sovereignty? How does this amendment relate to the age-old constitutional principle that “the power to tax is the power to destroy”? 2. Explain the reasoning as to why the FLSA does not forbid public employers from forcing their employees to take compensatory time off, even when those employees would prefer not to do so. 3. Why should a public employee mind being ordered to take some time off? 4. Suppose that Harris County had lost this case. Could the county, in order to prevent its employees from accumulating more compensatory time, lay them off? If so, would this in effect force such employees to fall back on their accumulated comp time anyway? 5. If such employees were represented by a labor union, what should the union’s position appropriately be with respect to this controversy? In light of the court’s ruling, what provisions might that union try to negotiate into the relevant collective bargaining agreement to provide its members with as much discretion in their use of comp time as legally possible? 22-2b Minimum Wages The government regulation of the minimum wage is an attempt to reduce poverty and bring the earnings of workers closer to the cost of living. The setting of the minimum wage was also an attempt to maintain the purchasing power of the public to lift the country out of the economic depths of the Great Depression. The concept of a minimum wage may seem simple: The employer may not pay employees less than the minimum wage per hour. In 1938, the minimum wage was set at $0.25 per hour, and it was raised to $0.40 per hour through the next seven years. The federal minimum wage for covered nonexempt employees is currently $7.25 per hour; it was last raised on July 24, 2009. Although the concept of the minimum wage seems simple, administering it may present some problems because of the wide variation in methods of compensating employees. For example, many employees are paid on an hourly basis, whereas others receive a weekly or monthly salary. Waiters and waitresses often rely on tips from customers for a large percentage of their earnings. Machinists and sewing machine operators are usually paid on a “piece-rate” basis; that is, they earn a certain amount of money for each piece completed. Salespeople usually earn a commission, which may or may not be supplemented by a base salary. Musicians may be paid a flat rate per engagement, and umpires or referees may be paid by the game. Such atypical compensation methods are subject to regulations developed by the admin- istrator of the Wage and Hour Division of the Department of Labor (DOL). The regulations are designed to ensure that all workers receive at least the minimum wage. If a worker is a “tipped worker”—that is, one who receives tips from customers—the employer is allowed to reduce the minimum wage paid to that worker by up to 40 percent, with the difference to be made up by tips received. The earnings of workers who are paid on a piece-rate basis must average out to at least the minimum wage; the time period over which the earnings are averaged cannot be longer than a single workweek. This means that the earnings of such an employee may be less than the minimum wage for any single hour, as long as the total earn- ings for the week average out to the minimum wage. Some persons being paid for the work may not even be viewed as employees at all for purposes of Fair Labor Standards Act coverage. Employers may have an incentive to characterize some workers as independent con- tractors rather than employees. If a worker is an independent contractor, they are not covered by the minimum wage and overtime provisions of the FLSA, and the employer may not be required to make income tax deductions, Social Security, and workers’ compensa- tions contributions on behalf of those workers. The U.S. Department of Labor has recently made the misclassification of workers one of its top enforcement priorities, and the Internal Revenue Service and U.S. Government Accountability Office estimated that employee mis- classification will cost the federal government over $7 billion in payroll taxes lost over the 10 years. A number of states have entered into memoranda of understanding to implement and improve detection and enforcement of employee misclassification. The following case addresses the issue of whether exotic dancers are employees or independent contractors.

CASE 22.3 terry v. saPPHire Gentlemen’s Club 336 P.3d 951 (Nevada Supreme Court 2014)

Facts: Sapphire Gentlemen’s Club [Sapphire] contracts for semi-nude entertainment with approximately 6,600 performers. Under those contracts, the performers may determine their own schedules, subject to a minimum shift length of six hours any day they decide to work; set prices for their private performances (provided that they comply with the club’s established minimum charge); control the “artistic aspects” of their performances (though the club DJ chooses the music they dance to, and they must obey club rules as to body positioning and physical contact with customers); and perform at other venues should they wish to. The performers also agree to abide by certain “house rules,” including a minimum standard of coverage by their costumes and a minimum heel height; payment of a “house fee,” which ranges in amount, any night they work; and performing two dances per shift on the club stage unless they pay an “off- stage” fee. Sapphire does not pay wages to the perform- ers, whose income is entirely dependent upon tips and dancing fees paid by Sapphire patrons. The performers filed suit against the Sapphire challenging their work ar- rangements, claiming that they were “employees” within the meaning of state minimum wage laws and were thus guaranteed a minimum wage. The district court found that the performers were not “employees” within the meaning of the state legislation and granted summary judgment for Sapphire. The performers appealed to the Nevada Supreme Court. Issue: Are the performers at Sapphire Gentlemen’s Club employees within the meaning of the state minimum wage laws and thus entitled to the minimum wages guaranteed by state and federal law? Decision: The state legislature has long used federal mini- mum wage laws as a platform for the state’s minimum wage scheme, and for practical reasons the two schemes should be harmonious in terms of which workers are entitled to protection. The court here therefore adopted the Fair Labor Standards Act’s “economic realities” test for employment in the minimum wage context. Sapphire argued that the performers had no “contract of hire” and alternatively that the performers were not “in the service of ” Sapphire. The court rejected those arguments. First, the signed entertain- ment agreement, which describes in detail the terms under which Sapphire permits the performers to dance at its facil- ity, is an express contract of hire, despite that therein the parties state that they “intend that the relationship created will be only that of Sapphire and Entertainer and not any other legal relationship.” Given the purpose of remedial leg- islation such as minimum wage laws, a putative employer’s self-interested disclaimers of any intent to hire cannot con- trol the realities of an employment relationship. Thus, Sap- phire’s protestations that the performers “never intended to be employees” and agreed to be independent contractors are beside the point. The court noted that the state legislature has long relied on the federal minimum wage law to lay a foundation of worker protections that Nevada could build upon. The parallels between the state and federal laws are part of a larger national pattern of laws that have emerged to deal with common problems in the minimum wage context, and many other states have adopted the economic realities test to determine whether an employment relationship exists under their respective state minimum wage laws. The economic realities test fashioned by the federal courts examines the totality of the circumstances and determines whether, as a matter of economic reality, workers depend upon the business to which they render service for the opportunity to work. The state legislature has not clearly signaled its intent that Nevada’s minimum wage scheme should deviate from the federally set course, the state and federal minimum wage laws should be harmonious in terms of which workers qualify as employees under them. The Nevada Supreme Court therefore adopted the FLSA’s economic realities test for employment in the context of Nevada’s minimum wage laws. In applying the economic realities test, there are some factors which courts nearly universally consider: 1. the degree of the alleged employer’s right to control the manner in which the work is to be performed; 2. the alleged employee’s opportunity for profit or loss depending upon his managerial skill; 3. the alleged employee’s investment in equipment or materials required for his task, or his employment of helpers; 4. whether the service rendered requires a special skill; 5. the degree of permanence of the working relationship; and 6. whether the service rendered is an integral part of the alleged employer’s business. The court then examined the district court’s summary judgment regarding the performers’ relationship with Sapphire. As to the “control” factor considered under the totality of the circumstances, at first look, the facts may appear mixed. Sapphire did not produce a set schedule for performers, theoretically allowing them to work any day they wished for as long as they wished, provided that they met a six-hour shift minimum or received permission to depart early. Additionally, though the club set a two stage-dance minimum for performers not paying the off-stage fee, and discouraged performers from refusing to give a lap dance if a customer requested one, the decision of whether or not to stage dance ultimately lay in the discretion of the performers, as did their acceptance or rejection of a patron’s invitation for a private dance. While Sapphire required performers to accept “dance dollars”—from which the club took a cut—whether or not they preferred to, performers were also permitted to accept cash, to which the club laid no claim. But Sapphire’s supposed lack of control may actually reflect “a framework of false autonomy” that gives performers “a coercive ‘choice’ between accruing debt to the club or redrawing personal boundaries of consent and bodily integrity.” Put differently, Sapphire emphasizes that performers may choose not to dance on stage at Sapphire so long as they also “choose to pay an optional ‘off-stage fee,’” and similarly that a performer may “choose not to dance for a patron she knows will pay with dance dollars, she may make that choice,” though the performer may not ask that patron to pay in cash, and in making either choice the performers also risk taking a net loss for her shift. But by forcing them to make such choices, Sapphire is actually able to heavily monitor the performers, including dictating their appearance, interactions with customers, work schedules, and minute-to-minute movements when working, while ostensibly ceding control to them. This reality undermines Sapphire’s characterization of the choices it offers performers and the freedom it suggests that these choices allow them; the performers are, for all practical purposes, “not on a pedestal, but in a cage.” The weight of other economic realities factors add to this characterization. First, given that the performers risked little more than their daily house fees, personal grooming expenditures, costume costs, and time, and that the one who “takes the risks ... reaps the returns,” their opportunity for profit was limited accordingly. That a performer might increase her profits through “hustling,” that is using her interpersonal skills to solicit larger tips, is not dispositive— “[a]s is the case with the zealous waiter at a fancy, four star restaurant, a dancer’s stake, her take and the control she exercises over each of these are limited by the bounds of good service....” [citations omitted]. With regard to the relative investment of the parties, Sapphire provides all the risk capital, funds advertising, and covers facility expenses. The performers’ financial contributions are limited to those noted above—their costume and appearance-related expenses and house fees. Thus, the performers are “far more closely akin to wage earners toiling for a living, than to independent entrepreneurs seeking a return on their risky capital investments,” and this factor also weighs in the performers’ favor. All work requires some skill, so in the economic realities context, courts look specifically for workers’ “special” skills; namely, whether their work requires the initiative demonstrated by one in business for himself or herself. Sapphire suggests that the performers’ ability to “hustle” clients is one such skill. But Sapphire does not interview the performers for any indication of their hustling prowess; it is not apparent that their work actually requires such initiative. In any case, though it may well be that a good “hustle” is a considerable boon in the field, “the ability to develop and maintain rapport with customers is not the type of ‘initiative’ contemplated by this factor.” Sapphire argued that the dancers are itinerant because they have the freedom to ply their dancing trade at a multitude of gentlemen’s clubs, and so the factor looking to the permanency of the relationship should weigh in its favor. Sapphire did allow the performers to work at other venues, and different performers testified that they continued schooling or other employment during their tenure at Sapphire. But that the performers “were free to work at other clubs or in other lines of work does not distinguish them from countless workers in other areas of endeavor who are undeniably employees, such as waiters, ushers, and bartenders. The ultimate inquiry is the nature of the performers’ dependence on the club, and ‘[e]ven if the freedom to work for multiple employers may provide something of a safety net, unless a worker possesses specialized and widely-demanded skills, that freedom is hardly the same as true economic independence.’ Thus, though the temporary nature of the relationship at issue weighs against it being that of employer/employee, this factor carries little persuasive value in the context of dancers and the clubs at which they perform, and cannot alone tilt the scales in Sapphire’s favor. Sapphire argued that exotic dancing is customarily performed by independent contractors, and therefore, is “not an integral part of Sapphire’s business.” Even assuming it is true that “exotic dancing” is typically performed by independent contractors, the court noted that was a tenuous proposition given that most other precedents demonstrate that it is performed by employees. Sapphire was not able to cite any authority supporting the application of the “normal work” test to this factor in the economic realities context. The court held that to do so simply made no sense; if we are examining whether work is “integral” to an employer’s business, the test must be whether it is “useful, necessary, or even absolutely indispensable” to the business. Given that Sapphire billed itself as the “World’s Largest Strip Club,” and not as a sports bar or night club, the court held that the women strip-dancing there were useful and indeed necessary to its operation. The court then held that, based on the review of the totality of the circumstances of the working relationship’s economic reality, Sapphire qualified as an employer under the state legislation, and the performers therefore qualified as employees under the law. In so holding, the court noted that its decision was in accord with the great weight of authority, which has almost “without exception ... found an employment relationship and required ... nightclub[s] to pay [their] dancers a minimum wage.” The court therefore reversed the district court’s grant of summary judgment in favor of Sapphire and remanded the case for further proceedings consistent with this opinion. Case Questions 1. How would the performers’ status as independent contractors affect Sapphire’s obligations toward them? Why would Sapphire have an economic incentive to classify them as independent contractors and not employees? 2. Why does the court hold that the individual “entertainment agreements” between the individual performers and Sapphire are not definitive in determining the relationship between the performers and the club? 3. Why does the court look to federal courts’ use of the “economic realities” test to determine whether the performers were employees for the purposes of state minimum wage law?

Another FLSA issue with which the DOL and courts have wrestled is whether employees are to be paid for the time required for an employee to prepare to perform the job and the time required to end the day’s performance. This issue has arisen, for instance, in the following situations: • Where the shifts of incoming and outgoing retail clerks must effectuate a transfer of the store’s cash register between their shifts; • Where miners and factory workers must don uniforms or equipment in a locker room at the start of their shifts and perhaps shower and change at the end of their workdays. The FLSA did not initially define “work” or “workweek”; in some early FLSA decisions, the Supreme Court interpreted those terms broadly. The Court found that the time spent traveling between mine portals and underground work areas, and the time spent walking from time clocks to work benches, were compensable under the FLSA. Congress responded by passing the Portal-to-Portal Act. The Portal-to-Portal Act exempted employers from liability for future claims based on two categories of work- related activities as follows: (a) Except as provided in subsection (b) [which covers work compensable by contract or custom], no employer shall be subject to any liability or punishment under the Fair Labor Standards Act of 1938, as amended, ... on account of the failure of such employer ... to pay an employee overtime compensation, for or on account of any of the following activities of such employee engaged in on or after the date of the enactment of this Act—walking, riding, or traveling to and from the actual place of performance of the principal activity or activities which such employee is employed to perform, and activities which are preliminary to or postliminary to said principal activity or activities, (1) (2) which occur either prior to the time on any particular workday at which such employee commences, or subsequent to the time on any particular workday at which he ceases, such principal activity or activities.7 The following case involves the application of the Portal-to-Portal Act to determine whether certain activities are compensable under the FLSA.

CASE 22.4 salazar v. butterball, llC 644 F.3d 1130 (10th Cir. 2011)

Facts: Butterball’s Longmont plant produces turkey products, including cooked ready-to-eat (RTE) turkey products. Butterball acquired the plant from ConAgra Foods in 2006. Butterball retained the same workforce, management, and pay practices that were in place during ConAgra’s ownership. The plaintiffs worked at various times in the plant’s deboning, evisceration, packaging, and quality assurance departments. They were required to don various items of apparel and equipment prior to their shifts and to doff such items after their shifts. Generally, production employees wore frocks, aprons, plastic sleeves, gloves, cotton glove liners, boots or overshoes, hard hats, earplugs, and safety glasses. When working in the deboning and evisceration areas, plaintiffs also wore mesh gloves, knife holders, and arm guards. As the parties have done, we refer to these items collectively as personal protective equipment, or PPE. Butterball, continuing ConAgra’s practice, has never paid most production employees for donning and doffing time. The plaintiffs are aware that they have never been paid for donning and doffing time. Production employees at the plant are represented by United Food and Commercial Workers Local 7 (UFCW 7 or the Union). ConAgra and UFCW 7 entered into a collective bargaining agreement (CBA) for the period of February 6, 2005 through February 2, 2008. Butterball and UFCW 7 entered into a new CBA for the period of February 3, 2008 through February 2, 2009. As of April 1, 2009, the Union was working without a contract, and the current status of negotiations is not evident from the record presented. Neither CBA discusses donning and doffing pay or how hours worked are to be calculated. On December 16, 2005, the Union filed a grievance claiming that employees should be paid for donning and doffing time. ConAgra denied the grievance and the Union demanded arbitration on November 13, 2006. However, arbitration did not occur. Butterball presented evidence that the grievance had been resolved by April 2008. On the other hand, the plaintiffs presented evidence that the Union considered the grievance to be pending, at least as of June 1, 2007. It is undisputed that the issue of donning and doffing pay was not discussed during negotiations of either CBA. The FLSA, Portal-to-Portal Act, and 29 U.S.C. § 203(o) Congress enacted the FLSA in 1938 “to establish nationwide minimum wage and maximum hours standards.” Moreau v. Klevenhagen, 508 U.S. 22, 25, 113 S.Ct. 1905, 123 L.Ed.2d

584 (1993). Generally, the FLSA mandates that employees be paid a minimum wage and paid at an overtime rate for hours worked in excess of forty in a workweek. The statute does not define “work” or “workweek,” and the Supreme Court’s early FLSA decisions interpreted those terms broadly. IBP, Inc. v. Alvarez, 546 U.S. 21, 25, 126 S.Ct. 514, 163 L.Ed.2d 288 (2005). In Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 690–91, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946), the Supreme Court held that the “workweek” included “all time during which an employee is necessarily required to be on the employer’s premises, on duty or at a prescribed workplace....” Congress enacted the Portal-to-Portal Act, 29 U.S.C. §§ 251–62, in response to Mt. Clemens and other judicial decisions that, in Congress’s view, interpreted the FLSA “in disregard of long-established customs, practices, and contracts between employers and employees, thereby creating wholly unexpected liabilities.” 29 U.S.C. § 251(a). Among other things, the Portal-to-Portal Act provided that employers could not be liable under the FLSA for failure to compensate time an employee spent performing activities that were preliminary or postliminary to “the principal activity or activities which such employee is required to perform.” The Supreme Court interpreted this provision to mean that activities performed prior or subsequent to a regular work shift are compensable if they are “an integral and indispensable part of the principal activities for which covered workmen are employed....” Steiner v. Mitchell, 350 U.S. 247, 256, 76 S.Ct. 330, 100 L.Ed. 267 (1956). In 2005, the Supreme Court held that, assuming donning and doffing was an integral and indispensable activity, any post- donning and pre-doffing walking time (i.e., between locker rooms and production areas) would be compensable under the Portal-to-Portal Act. Congress amended the FLSA again in 1949 enacting, among other provisions, what is now 29 U.S.C. § 203(o). Section 203(o) defines hours worked: Hours worked.—In determining for the purposes of sections 206 and 207 of this title [minimum wage and maximum hours] the hours for which an employee is employed, there shall be excluded any time spent in changing clothes or washing at the beginning or end of each workday which was excluded from measured working time during the week involved by the express terms of or by custom or practice under a bona fide collective-bargaining agreement applicable to the particular employee. Colorado Wage Order 27 The Colorado Minimum Wage Act, Colo.Rev.Stat. §§ 8-6-101-8-6-119, prohibits employment of workers “for wages which are inadequate to supply the necessary cost of living and to maintain the health of workers so employed” or “under conditions of labor detrimental to [workers’] health or morals.” Colo.Rev.Stat. § 8-6-104. The Act also delegates to the Colorado Department of Labor the authority to set minimum wage and maximum hour standards. Colo.Rev.Stat. § 8-6-106. Pursuant to this authority, the Colorado Department of Labor issued Wage Order 27, which prescribes minimum wage and overtime requirements *1136 for employees in the retail and service, food and beverage, commercial support service, and health and medical industries. 7 Colo.Code Regs. § 1103-1:1. Procedural History Plaintiffs filed a complaint in the United States District Court for the District of Colorado, seeking to bring a collective action under the FLSA and a class action under Colorado law for compensation for time spent “donning, doffing, and sanitizing gear and equipment, and walking to and from the production floor.” Aplt. App., Vol. I at 12–13. Butterball moved for summary judgment on both claims. A magistrate judge issued a Report and Recommendation determining that plaintiffs’ PPE was clothes under 29 U.S.C. § 203(o) and there was a custom or practice of nonpayment, and that Butterball was not subject to Wage Order 27. The district court adopted the Report and Recommendation and entered summary judgment in Butterball’s favor. Plaintiffs appeal.... III. Plaintiffs contend that Butterball violated the FLSA by failing to compensate them for donning and doffing time. Butterball argues that it is not required to compensate donning and doffing time for the following reasons: it is not work under the FLSA; it is excluded from FLSA “hours worked” by 29 U.S.C. § 203(o); it is not compensable pursuant to the Portal-to-Portal Act, specifically 29 U.S.C. § 254(a); and it is de minimis. The district court based its FLSA ruling on § 203(o), and we do the same. Section 203(o) excludes “any time spent changing clothes or washing” from “the hours for which an employee is employed” if such time “was excluded from measured working time during the week involved by the express terms of or by custom. or practice under a bona fide collective-bargaining agreement applicable to the particular employee.” 29 U.S.C. § 203(o). We hold that donning and doffing the PPE at issue in this case is changing clothes and that there is a custom or practice of excluding donning and doffing time from measured working time under the collective bargaining arrangement between the Union and Butterball. We, therefore, affirm the district court’s ruling that Butterball did not violate the FLSA by failing to pay plaintiffs for donning and doffing time.

The Supreme Court addressed a similar issue in Integrity Staffing Solutions, Inc. v. Busk.8 That case involved hourly warehouse workers who retrieved products from ware- house shelves and packaged them for delivery to Amazon.com customers, and who were required to undergo a security screening before leaving the warehouse each day; the em- ployees often spent up to 25 minutes waiting to be screened. The Supreme Court held that time spent by employees waiting for and undergoing security screenings before leaving workplace was not compensable under FLSA.

22-2c Overtime pay In addition to being entitled to earn the minimum wage, employees covered by the FLSA are entitled to overtime pay at one-and-a-half times their regular pay rate for hours worked in excess of 40 hours per workweek. The term workweek has special significance under the FLSA. It is a “term of art” with a fairly precise meaning. A workweek consists of seven consecutive days, but the law does not require that the workweek start or end on any particular day of the calendar week. For instance, a workweek may run from Tuesday to Monday or from Friday to Thursday. The starting day of the workweek may be changed from time to time, provided that the purpose of the change is not to avoid the requirements of the law (such as avoiding the payment of overtime to a group of workers).

As with the minimum wage, regulations have been developed to compute the hourly wages of workers paid by commission, piece-rate, and so forth for the purpose of calculating overtime pay. A more difficult question is deciding whether certain hours, not strictly part of working hours, should be included in working time for the calculation of wages and overtime. The Portal to Portal Act of 1947, which amended the FLSA, provides that preliminary or postwork activities are to be included in compensable time only if they are called for under contract or industry custom or practice.

22-2d exemptions from Overtime and Minimum Wage provisions Not all employees under the FLSA are entitled to overtime pay or subject to the minimum wage. The FLSA sets out four general categories of employees who are exempt from the minimum wage and overtime requirements of the statute. Such exempt employees include executives, administrators, professionals, and outside salespeople.

ethical dILemmA

convenience store cLerk’s conundruM College sophomore Suzy Smart works part-time in the Handi Mart convenience store near campus. The manager at Handi Mart requires that each clerk arrive 15 minutes prior to the start of the shift so that the clerk going off duty can review the sales figures and cash status with the replacement before leaving. The clerk going off duty punches her timecard after this review, but the oncoming clerk is not allowed to clock in until the review is completed and she has agreed that the sales and cash figures are accurate. Sometimes this exercise takes more than 15 minutes; no matter how long it takes, the clerk coming on duty may not punch her timecard and start earning wages until the process is completed. This semester, Suzy is taking a course on labor and employment law. After reading the text chapter concerning minimum wage and overtime rules under the FLSA, she realizes that the store manager is violating the law by not allowing the oncoming clerk to punch the time clock as soon as she arrives. She brings this up with the store manager. The store manager tells Suzy that he is not allowed by the parent corporation of Handi Mart to compensate two clerks for the same period of time, no matter how brief, because this is classified by the corporation as a “single coverage” store. Furthermore, he adds ominously, if Suzy complains to the Wage and Hour Division of the U.S. DOL, he probably will be forced by the company to lay off Suzy and the other part-timers and cover the evening shifts himself. “You may get everyone a few dollars in back pay,” he adds, “but you’ll also cost everybody their jobs. Remember, some of your coworkers are single parents who need this extra income to make ends meet.” Should Suzy file a minimum wage complaint with the U.S. DOL? Executive Employees The regulations under the FLSA provide the following test: (1) Employee is compensated on a salary basis at a rate of not less than $455 per week (or $380 per week, if employed in American Samoa by an employer other than the Federal Government), exclusive of board, lodging, or other facilities; (2) Her or his primary duty is management of the enterprise in which the employee is em- ployed or of a customarily recognized department or subdivision thereof; (3) She or he customarily and regularly directs the work of two or more other employees; and (4) She or he has the authority to hire or fire other employees or to make suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight.9 Administrative Employees The regulations under the FLSA set out the following test: (1) Employee is compensated on a salary or fee basis at a rate of not less than $455 per week (or $380 per week, if employed in American Samoa by an employer other than the Federal Government), exclusive of board, lodging, or other facilities; (2) Her/his primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and (3) Her/his primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.10 Professional Employees Employees in bona fide professional positions are exempted from the FLSA’s overtime and minimum wage provisions if they meet the following test: (1) Employee is compensated on a salary or fee basis at a rate of not less than $455 per week (or $380 per week, if employed in American Samoa by an employer other than the Federal Government), exclusive of board, lodging, or other facilities; and (2) Her/his primary duty is the performance of work: (a) Requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction; or (b) Requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor.11

Outside Salespeople The regulations under the FLSA exempt outside salespeople from both the overtime and minimum wage provisions. To be exempt, the following requirements must be met: (1) Employee’s primary duty is: (a) making sales within the meaning of section 3(k) of the Act, or (b) obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and (2) S/he is customarily and regularly engaged away from the employer’s place or places of business in performing such primary duty. (a) (b) The term “primary duty” is defined at Section 541.700. In determining the primary duty of an outside sales employee, work performed incidental to and in conjunction with the employee’s own outside sales or solicitations, including incidental deliveries and collections, shall be regarded as exempt outside sales work. Other work that furthers the employee’s sales efforts also shall be regarded as exempt work including, for example, writing sales reports, updating or revising the employee’s sales or display catalogue, planning itineraries and attending sales conferences. The requirements of subpart G (salary requirements) of this part do not apply to the outside sales employees described in this section.12 An employer that wants to pay a category of employees a salary and treat them as falling outside the minimum wage and overtime rules cannot end its inquiry with the FLSA, however. When Congress determines that the federal government should regulate some aspect of our lives, it also decides whether the new federal statute will preempt the field or whether (alternatively) the 50 states may continue to play a role. In such enterprises as TV and radio broadcasting and airline travel, Uncle Sam has taken over regulating almost all activities. In others, such as ERISA (see Chapter 21), Congress has claimed the largest part of pension and benefits regulation, leaving only insurance and banking to state laws. But in some important areas of employment law, such as job discrimination (see Chapters 6–10), Congress actually has encouraged the states to supplement federal efforts with their own laws. The same is true for the FLSA. The states may supplement the federal wage and hours laws and regulations, provided state law expands the rights accorded to workers by the federal scheme. Sometimes state involvement in wage and hour issues can make the law quite con- fusing. For instance, what if workers from New Mexico and Arizona are sent to do a job in California? Which law should apply, if the federal law and the laws of the several states provide differing rights with respect to overtime pay? This issue troubled the U.S. Court of Appeals for the Ninth Circuit in 2008 and 2009. In 2008, the court awarded overtime pay to such out-of-state workers.13 Then on February 17, 2009, the court thought better of its decision, withdrew it, and certified the case to the California Supreme Court for its opinion.14 The California Supreme Court responded as follows: (1) The California Labor Code overtime compensation statutes apply by their terms to work performed in California by nonresidents; (2) under conflict-of-laws principles, Labor Code overtime compensation provisions applied to full days and weeks of work performed in California by nonresidents; (3) The California Unfair Competition Law [UCL] applies to a failure to pay overtime for work performed in California by nonresidents; but (4) UCL did not apply to employer’s alleged failure to pay Fair Labor Standards Act (FLSA) overtime for work performed outside California.15 After the California Supreme Court answered those questions, the Ninth Circuit then held that application of California Labor Code provision requiring California-based employer to pay overtime to out-of-state employees did not violate due process or dormant commerce clause of the U.S. Constitution.16

ThE WORKING LAw

Presidential Memorandum—Updating and Modernizing Overtime MEMORANDUM FOR THE SECRETARY OF LABOR Regulations

SUBJECT: Updating and Modernizing Overtime Regulations he Fair Labor Standards Act (the “Act”), 29 U.S.C. 201 et seq., provides basic rights and wage protections for American workers, including Federal minimum wage and overtime requirements. Most workers covered under the Act must receive overtime pay of at least 1.5 times their regular pay rate for hours worked in excess of 40 hours per week. However, regulations regarding exemptions from the Act’s overtime requirement, particularly for executive, administrative, and professional employees (often referred to as “white collar” exemptions) have not kept up with our modern economy. Because these regulations are outdated, millions of Americans lack the protections of overtime and even the right to the minimum wage. Therefore, I hereby direct you to propose revisions to modernize and streamline the existing overtime regulations. In doing so, you shall consider how the regulations could be revised to update existing protections consistent with the intent of the Act; address the changing nature of the workplace; and simplify the regulations to make them easier for both workers and businesses to understand and apply. This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person. Nothing in this memorandum shall be construed to impair or otherwise affect the authority granted by law to a department or agency, or the head thereof. You are hereby authorized and directed to publish this memorandum in the Federal Register. BARACK OBAMA Source: “Presidential memorandum—updating and modernizing overtime regulations,” The White House, March 13, 2014, available at https://www.whitehouse.gov/the-press-office/2014/03/13/ presidential-memorandum-updating-and-modernizing-overtime-regulations

22-2e Limitations on Child Labor The problems of child labor are graphically demonstrated by photographs from the late 19th and early 20th centuries showing children who had spent their youth toiling in coal mines or factories. The children, often immigrants, were subjected to the same hazardous conditions and occupational diseases as were their parents. They received little or no formal education. Their wages were usually meager and, as a result, drove down the wages of adult workers who held the same, or similar, jobs. The social and economic problems of child labor were recognized by government; many states passed legislation attempting to limit child labor. Those early laws were restricted in their effectiveness, though, and the number of children employed continued to rise until about 1910. Congress made several attempts to enact federal limitations on child labor. In 1916, a law prohibiting the shipment in interstate commerce of goods produced by factories or mines employing child labor was passed. The Supreme Court, however, in the 1918 case of Hammer v. Dagenhart,18 held that the law was unconstitutional because it exceeded the limited power granted to the federal government under the commerce clause of the Constitution. The National Industrial Recovery Act (NIRA) provided that the codes of fair competition for each industry could limit child labor, but in 1935, the NIRA was held unconstitutional by the Supreme Court in Schecter Poultry v. U.S. In 1936, the Walsh- Healy Act prohibited contractors under government contracts from using child labor to produce, manufacture, or furnish materials for the contract. The Fair Labor Standards Act of 1938 at last provided for general federal regulation of child labor.

The FLSA and Child Labor The FLSA does not prohibit all child labor; rather, it proscribes only “oppressive” child labor. The act prohibits the interstate shipment of goods from establishments employing oppressive child labor. It also prohibits oppressive child labor in any enterprise with two or more employees engaged in the production of goods for interstate commerce. The definition of “oppressive child labor” is crucial to the administration of the act. The act defines oppressive child labor by using age restrictions and identifying hazardous occupations. Employing minors under age 18 in any occupation identified as hazardous by the secretary of labor is prohibited. At present, a number of occupations have been identified as hazardous by the secretary of labor, including the following: • coal mining or mining other than coal; • occupations in or about plants manufacturing explosives or articles containing explo- sive components; • occupations involving operation of motor-driven hoisting apparatus; • logging or saw milling occupations; • occupations involving exposure to radioactive substances; • occupations of motor-vehicle operator or helper; • occupations involving operation of power-driven woodworking machines; • occupations involving operation of power-driven metalworking, forming, punching, or shearing machines; occupations in or about slaughtering or meatpacking plants or rendering plants; occupations involving the manufacture of brick, tile, or related products; occupations involving the operation of circular saws, handsaws, and guillotine shears; occupations involving wrecking, demolition, and ship-breaking. • • • • Minors aged 16 to 18 may work in certain nonhazardous occupations, and minors aged 14 to 16 may be employed in non-manufacturing or non-mining occupations for limited hours outside school hours. Minors under age 14 can be employed only in agriculture under specific limitations and with parental consent. The regulations limiting work by minors aged 14 to 16 further specify that the minors’ hours between 7 a.m. and 7 p.m. may not exceed 18 hours per week when school is in session or 40 hours per week when school is not in session; nor may they exceed three hours per day when school is in session or eight hours per day when school is not in session. Specific exemptions from the category of oppressive child labor include the employment of: • newspaper carriers who are engaged in delivering papers to consumers; • minors who are hired as actors or performers in movies, radio, television, or theatrical productions; and • minors who are employed by their parents, or persons standing in the place of parents, in occupations other than manufacturing, mining, or others identified as hazardous by the secretary of labor. Although child labor cases have become relatively rare in recent years, the DOL strictly enforces the FLSA provision. In the following case, the secretary of labor argues about the line between “student” and “employee” at a boarding school.

CASE 22.5 solis v. laurelbrook sanitarium and sCHool, inC. 642 F.3d 518 (6th Cir. 2011)

Facts: Founded in 1950 by a group of Seventh-Day Adventists, Laurelbrook is a nonprofit corporation located in Dayton, Tennessee. Laurelbrook follows the philosophy and teachings of the Seventh-Day Adventist Church and its founder, Ellen G. White, which include the view that children are to receive an education with a practical train- ing component. In conformity with its beliefs, Laurelbrook operates a boarding school for students in grades nine through twelve, an elementary school for children of staff members, and a 50-bed intermediate-care nursing home that assists in the students’ practical training (the Sanitarium). The school has been approved and accredited by the Tennessee Department of Education since the 1970s. The State of Tennessee accredits certain private schools through independent authorized accrediting agencies. The E.A. Sutherland Education Association (EASEA) is one such agency, whose purpose is to consider and adjudicate requests for accreditation from self-supporting (as opposed to denominational) schools, like Laurelbrook, which are operated by members of the Seventh-Day Adventist Church. Laurelbrook is currently accredited through EASEA. Students in Laurelbrook’s boarding school learn in both academic and practical settings, spending four hours of each school day in the classroom and four hours learning practical skills. The two aspects of the education are integrated, and all teachers instruct in both settings. Laurelbrook’s stated mission is the “education of young people, providing a balanced program of spiritual, academic and vocational training to high school students (grades nine through twelve) with a goal of reproducing the character of God and preparing for His service.” Students learn practical skills, in part, so they can later serve as missionaries in foreign lands. Boarding students keep busy with “wholesome activities” that teach them practical skills about “work, responsibility, [and] the dignity of manual labor,” and that contribute to maintaining Laurelbrook’s operations. Laurelbrook offers the following vocational courses: Agriculture, Building Arts, Grounds Management, Mechanical Arts, Office Procedures, Plant Services, Water Services, Certified Nursing Assistant (“CNA”), Child Development, Environmental Services, and Food Service. The Sanitarium is an integral part of Laurelbrook’s vocational training program. As part of their training, students are assigned to the Sanitarium’s kitchen and housekeeping departments. Students sixteen and older may participate in the CNA program, which is approved by the State of Tennessee licensing authority. Students who receive their CNA certification may then be assigned to the Sanitarium to provide medical assistance to patients. Students assist patients in relation to the students’ training and in line with Laurelbrook’s guiding philosophy of education. Laurelbrook receives Medicaid funding for the care it provides at the Sanitarium. The Sanitarium is staffed such that if the students were not training there, staff members could continue to provide the same patient services. But since the Sanitarium is integral to the education the school provides, Laurelbrook would not operate the Sanitarium if the school did not exist. In other words, the Sanitarium’s sole purpose is to serve as a training vehicle for students. Therefore, the district court reasoned, students do not displace adult workers or other employees who might be willing to work at the Sanitarium. Many of Laurelbrook’s practical training courses (16 of 25) are approved by the Tennessee Department of Education for transfer credit. Several others are approved as “special courses,” meaning a transferee school can accept the courses at its discretion. Students learn to use tools associated with specific trades, and the learning experience is similar to that received in vocational training courses at public schools. Adult staff members adequately supervise students and provide reasonable safeguards to protect them from hazardous activities. Laurelbrook has performed reasonably well in ensuring student safety. Students do not receive wages for duties they perform. They are not entitled to a job with Laurelbrook upon graduation, and are expected to move on after graduation. Laurelbrook provides “important tangible benefits and intangible training” and its students “reap great benefits” from the training and education provided. Any benefits Laurelbrook derives from its students are “secondary to its religious mission” of providing academic and practical training. Therefore, the district court reasoned, any such benefits are “much less” than those received by the students. Laurelbrook does not compete for labor. Its vocational program compares favorably with programs operated by public high schools in the area. But because Laurelbrook operates a boarding school, it cannot compare perfectly with a public school where students are only in school for part of the day. Laurelbrook is responsible for its boarding students at all times, and its efforts to keep the students gainfully occupied are in keeping with its religious mission to teach students moral character. In February 2007, the Secretary brought this action to enjoin future violations of 29 U.S.C. §§ 212(a), 212(c), and 215(a)(4), as well as Child Labor Regulation 3, 29 C.F.R. §§ 570.31–.37. The district court conducted a seven-day bench trial between August 19, 2008 and April 6, 2009, and subsequently denied the Secretary’s request for a permanent injunction in a written order. The basis for the decision was that Laurelbrook students were not “employees” under the FLSA, thus rendering the Act inapplicable to Laurelbrook’s entire operation. To reach this result, the district court considered the benefits each party received from the work performed, and concluded that the primary benefit of the work students performed at Laurelbrook ran to themselves, not Laurelbrook. The Secretary appealed. Issue: Does the student vocational training practiced at Laurelbrook violate the child labor provision of the FLSA? Decision: Students received primary benefit of work they performed in boarding school’s practical training courses, during which students worked in school run nurs- ing home, including in nursing home’s kitchens or as part of nursing home’s certified nursing assistant (CNA) pro- gram, and therefore, were not employees under the Fair Labor Standards Act (FLSA), as would violate the child labor provisions; students did not displace compensated workers, instructors had to spend extra time supervising students at the expense of performing productive work, nursing home was sufficiently staffed such that it could run even if students did not perform work, students were provided hands-on training comparable to that of a public school vocational course, students learned to operate tools normally used in the trades they were learning, courses had been considered and approved by a state accrediting agency, and students received intangible benefits, includ- ing value of hard work and respect for the elderly and infirm. Fair Labor Standards Act of 1938, § 1 et seq., 29 U.S.C.A. § 201 et seq. The district court applied the proper test when it asked which party to the relationship received the primary benefit of the students’ activities. We find the district court’s findings of fact amply supported by the evidence adduced at trial, and agree with its application of the primary benefit test to conclude that the students at Laurelbrook are not employees for purposes of the FLSA. Accordingly, the judgment of the district court is affirmed.

22-2f enforcement and remedies Under the FLSa The FLSA is enforced by the Department of Labor (DOL). The Wage and Hour Division of the DOL performs inspections and investigations and issues rules and regulations. The secretary of labor is authorized to file suit on behalf of employees seeking to collect wages and overtime and may also recover liquidated damages in an amount equal to the amount of wages owed. The secretary may also seek injunctions against violations of the act. Criminal proceedings for willful violations may be instituted by the Department of Justice. Employees may file suit to recover back wages and overtime plus liquidated damages in an equal amount. They may also seek reinstatement and may recover legal fees. The statute of limitations for violations is two years; for willful violations it is extended to three years. The Supreme Court discussed the definition of “willful” in McLaughlin v. Richland Shoe Co.19 The Court defined “willful” as “that the employer either knew or showed reckless disregard as to whether its conduct was prohibited by the FLSA.” Employees generally may not release employers for less than the full amount owing, nor may employees waive their rights to compensation under the act. The child labor prohibitions are enforced by the prohibition of interstate shipment of goods produced by child labor and by fines. Fines may also be levied against employers who keep inadequate wage and hour records. The following case involves a discussion of the standard used by the court in determining whether to award liquidated damages.

CASE 22.6 mumby v. Pure enerGy serviCes 636 F.3d 1266 (10th Cir. 2011)

Facts: Pure Energy, a subsidiary of a Canadian oilfield services company, has provided services to U.S. gas and oil wells since 2004. Its field employees, which include Plaintiffs, work twelve-hour shifts, seven days per week, with one week off for every three weeks worked. Thus, employees work approximately eighty-four hours per workweek. During the events leading to this litigation, Pure Energy paid its field employees under a “day rate” compensation plan, whereby employees received a single daily payment regardless of the number of hours actually worked. Pure Energy defined its “day rate” not by the relevant regulation, 29 C.F.R § 778.112, but rather as a daily rate consisting of a defined regular rate for the first eight hours and an overtime rate for the remaining four hours of the day. For those employees paid in this fashion, Pure Energy did not keep track of either daily or weekly hours worked. Pure Energy’s pay scheme, however, violated the FLSA, which requires employers to compensate their employees “for a workweek longer than forty hours ... at a rate not less than one and one-half times the regular rate at which [the employee] is employed.” For an employee to be correctly paid under a day rate, a weekly “regular rate” is first calculated “by totaling all the sums received at such day rates ... and dividing by the total hours actually worked.” The employee “is then entitled to extra half-time pay at this [regular] rate for all hours worked in excess of 40 in the workweek.” Since its field employees’ work schedules exceeded forty hours per week, Pure Energy should have paid overtime for all hours worked over forty. Instead, Pure Energy paid only what it believed was a day rate which included, by its calculations, four hours of overtime per day. This formula did not comply with 29 C.F.R. § 778.112. Even by its own erroneous calculation, four hours of overtime per day falls well short of the FLSA-mandated overtime owed for all hours over forty where the employee works eighty-four hours each week. In 2005, after one year of U.S. operations, Pure Energy began transferring *1269 management of its U.S. operations from Canada to the United States. When it transferred payroll functions to its new domestic management team, it hired a new manager, Cindy Rucker, to run payroll operations in compliance with U.S. labor standards. At the time of her hiring, Ms. Rucker was aware of the FLSA, but she was unfamiliar with day rates. When she expressed concerns about the company’s compensation policy, Pure Energy’s management referred Ms. Rucker to a Colorado attorney, Paul Hurcomb. In January 2006, after speaking with Ms. Rucker and reviewing some of Pure Energy’s employment offer letters, Mr. Hurcomb advised Ms. Rucker that Pure Energy’s day rate policy complied with the FLSA so long as the company itemized regular and overtime rates and did not have its field employees work more than twelve hours per day. Mr. Hurcomb also discussed with Ms. Rucker that any weekly hours over forty had to be paid as overtime, regardless of the day rate. Mr. Hurcomb did not perform any legal research regarding day rates or the FLSA. Although he essentially stated the forty-hour overtime requirement correctly, his other advice was incorrect. After receiving Mr. Hurcomb’s advice, Ms. Rucker confirmed with management that Pure Energy was paying its employees correctly so long as it broke down the day rate into regular and overtime hourly rates and did not exceed twelve-hour shifts. However, until it changed its compensation policies in late 2007 to finally comply with the FLSA, Pure Energy continued to underpay its field employees for overtime. Field employees also continued to occasionally work more than twelve hours per day without additional compensation, in violation of Mr. Hurcomb’s advice. In 2007, a group of field employees sued Pure Energy for its violation of the FLSA, based on, inter alia, its failure to pay sufficient overtime. See Condos v. Pure Energy Servs. (USA), Inc., 07–CV–00127–ABJ (D. Wyo. filed June 12, 2007). The district court granted the Condos plaintiffs partial summary judgment, finding that Pure Energy had failed to pay the overtime required by the FLSA. Shortly thereafter, Pure Energy and the Condos plaintiffs settled. Plaintiffs in this case are similarly situated to the plaintiffs in Condos, and as such, Pure Energy has already admitted it owes Plaintiffs back pay for missed overtime. There were only two issues at summary judgment: first, whether Plaintiffs may be awarded compensatory damages under the extended three-year statute of limitations for Pure Energy’s “willful” violation of the FLSA; and second, whether Pure Energy should be required to pay liquidated damages. The district court denied Pure Energy’s motion and granted Plaintiffs’ motion in part, reserving judgment on the liquidated damages issue until after trial. The parties agreed to have the court rule on liquidated damages based on their existing briefs, and the district court then found Pure Energy liable for the full amount of liquidated damages. An appeal followed. Issue: Was the court within its discretion in awarding the plaintiffs liquidated damages? Decision: The court found that Pure Energy failed to compensate Plaintiffs for weekly overtime despite being put on notice. It applied its compensation policy in reck- less disregard of FLSA requirements, and is therefore sub- ject to the three-year statute of limitations for damages. The same facts that support the district court’s conclu- sion that Pure Energy’s failure to fully compensate Plain- tiffs’ weekly overtime was willful also support the district court’s conclusion that Pure Energy’s belief that it was complying with the FLSA was unreasonable. Moreover, even if the district court had found Pure Energy acted reasonably, it retained discretion to award liquidated damages.

The FLSA also prohibits retaliation against employees who invoke the statute’s protections. Section 215(a)(3) makes it illegal for an employer “to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter, or has testified or is about to testify in any such proceeding, or has served or is about to serve on an industry committee....”20 The Supreme Court held in Kasten v. Saint-Gobain Perfor- mance Plastics Corp.21 that an oral complaint by an employee was covered by the “filed any complaint” language of the FLSA anti-retaliation provisions. Following Kasten, the U.S. Court of Appeals for the Second Circuit held that an oral complaint triggered the FLSA protections against retaliation.22

Cihon P. J., & Castagnera J. O. (2016). Employment and Labor Law. [VitalSource]. Retrieved from https://online.vitalsource.com/#/books/9781305893597/