Since we first covered it a few weeks ago, the outbreak of coronavirus (COVID-19) has had an unprecedented impact and is no longer simply making headlines. It has now begun interrupting the flow of business – impacting financial markets, disrupting travel plans, and forcing the cancellation of meetings and events. (To the great disappointment of many sports fans, even landmark events such as the NCAA March Madness college basketball tournament and the Masters will not go on as planned this year). Seemingly nothing has been left untouched.

All this leaves many employers wondering – what does this mean for my workforce, and how can I plan? Ashley Hager covered many topics during our complimentary webinar, Managing Your Workforce During a Pandemic, on March 9, and in this blog series, we will address many of the issues employers may face under the various federal and state laws governing employment as the outbreak continues.

Occupational Safety Considerations for COVID-19

One of the first things that likely comes to mind for employers thinking about health and safety in the workplace is the federal Occupational Safety and Health Act (“OSH Act”), and for good reason: maintaining compliance with the primary federal law governing worker health and safety in the United States in uncharted territory can seem daunting. Below, we review the guidance that the Occupational Safety and Health Administration (“OSHA”) has offered so far related to COVID-19; we outline some of OSHA’s existing standards that may apply; and finally, we address a few other common OSHA-related questions.

OSHA Guidance on Coronavirus

First, although several industry groups and politicians have publicly urged OSHA to issue an emergency temporary infectious disease standard, as of the date of this blog post’s publication, there is not a specific OSHA standard covering the coronavirus. However, OSHA recently issued a 35-page Guidance on Preparing Workplaces for COVID-19. Among other things, the Guidance offers suggested steps for all employers to protect workers from exposure to and infection with COVID-19, such as developing an infectious disease preparedness and response plan and implementing workplace controls like safe work practices and personal protective equipment (“PPE”), among others. The Guidance goes on to divide job tasks into four risk exposure levels: very high, high, medium, and lower risk, with “the four exposure risk levels in the shape of a pyramid to represent probable distribution of risk” and offers additional suggestions based on each level of risk. OSHA opines that most American workers likely fall in the lower risk or medium categories, although the determination will be fact-specific. Note that while it is informative, the Guidance is not a standard or regulation, and creates no new legal obligations.

Even though there is not (yet) any binding standard from OSHA related to COVID-19, employers are not immune from OSHA compliance in the face of the outbreak. OSHA has indicated that its guidance on pandemic influenza may provide insight absent anything specific to coronavirus. More importantly, as OSHA itself has indicated, employers should be aware that multiple existing OSHA standards may be implicated by the risk and presence of coronavirus in the workplace. These may include, for example:

  • The General Duty Clause, Section 5(a)(1) of the OSH Act, 29 U.S.C. § 654(a)(1). This requires employers to furnish to each worker “employment and a place of employment, which are free from recognized hazards that are causing or are likely to cause death or serious physical harm.” OSHA may cite an employer under the general duty clause if the employer allows or directs a known infected employee to come to work and expose other employees to the risk of infection.
  • OSHA’s PPE standards (in general industry, 29 C.F.R. § 1910 Subpart I). These standards may require using gloves, eye and face protection, and respiratory protection, among other things, in appropriate circumstances.
  • OSHA’s Hazard Communication standard (in general industry, 29 C.F.R. 1910.1200). This and other applicable OSHA chemical standards require employers to protect their workers from exposure to hazardous chemicals – which may be present in many common chemicals used for cleaning and disinfection.

OSHA has also identified several additional general industry standards as potentially relevant, including standards like those governing access to employee exposure and medical records in 29 C.F.R. § 1910.1020 and sanitation in § 1910.141. Further, employers in one of the 28 states operating an OSHA-approved state plan may be subject to additional requirements (for instance, the Cal/OSHA Aerosol Transmissible Diseases standard).

Are COVID-19 Cases OSHA-Recordable?

Employers are required under OSHA’s recordkeeping regulations to record certain illnesses on the employer’s OSHA Form 300. While the recordkeeping regulations generally exempt the “common cold and flu,” COVID-19 is not considered a common cold or flu. OSHA’s current guidance, as of this blog post‘s publication, indicates that “COVID-19 can be a recordable illness if a worker is infected as a result of performing their work-related duties.” But, OSHA has indicated that employers are only responsible for recording cases of COVID-19 if all of the following are met:

  • The case is a confirmed case of COVID-19 (OSHA recommends that employers consult the CDC for additional guidance as to testing and confirmed results, and for persons under investigation for possible infection);
  • The case is work-related as defined by OSHA regulations (generally, an illness is work-related for OSHA purposes if it is more likely than not that a factor or exposure in the workplace caused or contributed to the illness); and
  • The case involves one or more of OSHA’s general recording criteria (such as days away from work, job transfer, and medical treatment.)

Thus, an employee who contracts a confirmed case COVID-19 from, for example, an international vacation has likely not experienced a “work-related” injury. However, if that same employee then comes into work and infects a co-worker, the co-worker may be considered to have experienced a work-related illness, which would need to be included on the employer’s Form 300 log presuming one of the recording criteria is met.

OSHA’s Impact on Remote Workers

Many employers are allowing or encouraging employees to telecommute in response to the COVID-19 outbreak and may question whether and to what extent OSHA regulations (even beyond those potentially related to COVID-19) apply to their remote workers. OSHA’s current position is that it will not conduct at-home workplace inspections and that it will generally not hold employers liable for at-home safety issues. However, employers’ other health and safety obligations remain intact, even for remote employees. Employers also retain responsibility for hazards caused by materials, equipment, or work processes the employer provides or requires to be used in an employee’s home.

In the case of an injury sustained at home, OSHA will consider an injury “work-related” if it both occurs while the employee is performing work for pay in their home and is directly related to the performance of work, rather than to the general home environment or setting. Employers are thus required to keep records of work-related injuries (and update their OSHA Form 300 logs) that otherwise meet the recordability criteria suffered by remote workers. So, employers should encourage all remote employees to report workplace injuries and unsafe working conditions and notify them of the procedures to do so.

Retaliation

Finally, given the constant influx of news and information (and, sometimes, misinformation) that employees may be hearing, reading, or discussing, employers should keep in mind the OSH Act’s anti-retaliation provision, which prohibits employers from retaliating against workers for raising concerns about safety and health conditions. OSHA’s current position is that most U.S. workers remain at a low risk for exposure. So, maintaining a calm presence in the face of employee concerns can go a long way in providing reassurance to worried workers (and avoiding a potential retaliation claim).

Stay tuned for additional insights in the next post in our coronavirus series. In the meantime, please reach out to a Troutman Sanders labor and employment attorney for guidance about COVID-19 and OSHA compliance specific to your workplace.

For two months, an outbreak of a novel coronavirus (COVID-19) has been spreading rapidly across the world. Is your company prepared to handle the issues that will arise if the virus spreads to your community or even becomes a pandemic? In this presentation, Ashley Hager will discuss tips for managing your workforce in light of the spreading coronavirus, including:

  • Options for dealing with employees who are unable or unwilling to work or who are not needed to work;
  • Changes you may need to make to your sick leave, attendance, telecommuting, and bereavement policies, and new policies you may want to adopt; and
  • Likely impacts on third-party health care benefit providers.

Webinar Details

  • Monday, March 9, 2020, 2 p.m. ET – 3 p.m. ET.
  • To register, please click here.
  • For more information, please contact Evan Kendall.

On January 30, 2020, three major events occurred: (1) the World Health Organization declared a new virus known as Coronavirus Disease 2019 (COVID-19) a “Public Health Emergency of International Concern”; (2) the first confirmed instance of person-to-person spread with this virus was reported in the United States; and (3) the U.S. State Department issued its highest-level warning against travel to China, where the virus was first detected. Since then, the coronavirus outbreak has continued to spread rapidly across the world, with the recent spike in coronavirus cases in South Korea, Iran, and Italy. The outbreak has also caused economic turmoil, as just within the past two days major global stock markets plunged more than they had in years. And while many questions still remain—such as how long this epidemic will last or whether there is even a cure—one thing is certain: the need for employers to take preventive measures in the workplace amidst the current coronavirus outbreak.

Before discussing what those measures are, here are some quick facts about the virus:

  • COVID-19 is a respiratory illness that was first detected in Wuhan, China in 2019.
  • Its symptoms include fever, cough, and shortness of breath.
  • As of this writing, the coronavirus outbreak has infected over 80,000 people worldwide and has killed over 2,700 people, mostly in China.
  • So far, 60 people have been diagnosed with the virus in the United States, mostly former passengers of the Diamond Princess cruise ship in Japan who are now in quarantine.

As these facts indicate, the people with the greatest risk of infection are those living in China. But even domestic workers, as evidenced by recent news, pose a risk of contracting the virus if they or their friends or relatives have recently been to China or other affected regions.

With that in mind, here is our top 5 list of how employers can stay immune amidst the coronavirus outbreak:

1. Limit Travel

As an initial matter, employers should strongly encourage their workers to avoid all nonessential travel to areas where the coronavirus outbreaks are high. Employers with business involving travel to those areas should consider reasonable alternatives for their workers, such as videoconferencing.

2. Engage in Open Communication

Employers should also inform workers that management is aware of and closely monitoring the coronavirus outbreak, particularly with respect to company travel to and from an affected region. If some workers have recently had overseas exposure, employers may generally inquire as to where the workers traveled or whether there was any potential exposure to a contagious illness during their travel. Asking and welcoming questions about the virus can be key to maintaining a calm work environment. Thus, without overreacting, employers should have management anticipate and prepare how to answer common questions that may be raised.

3. Reinforce Sick Leave and/or Remote Working Policies

According to the Centers for Disease Control and Prevention (CDC), a person may show symptoms of the coronavirus within 14 days of overseas exposure. In that situation, if workers show up feeling sick with a fever, a cough, or difficulty breathing, employers should encourage them to use their leave of absence to see a medical professional and return to work only once the symptoms disappear and/or they obtain a fitness-for-duty/return-to-work notice from their physician. If a worker refuses to do so or if the medical professional determines that a worker has contracted the coronavirus, employers may consider implementing remote working policies or requiring the worker to stay home from work to mitigate a “direct threat” to the workplace (for more information on what is a direct threat, please visit the Equal Employment Opportunity Commission’s website). In short, employers should encourage workers who have returned from overseas within the past 14 days that display symptoms of the coronavirus to stay at home for a limited time period.

4. Educate Workers

It is also pertinent for employers, especially those that have workers remaining overseas, to educate workers (and themselves) on how to stay protected from exposure to the coronavirus. Employers may do so by referring to appropriate government agencies, health organizations, and other resources to learn more about the virus. For example, the CDC lists the following recommendations to help prevent the spread of the virus:

  • Wash hands often with soap and water for at least 20 seconds, and if soap and water are not available, use an alcohol-based hand sanitizer;
  • Avoid touching eyes, nose, and mouth with unwashed hands;
  • Avoid close contact with people who are sick;
  • Stay home when sick;
  • Cover coughs or sneezes with tissues, then throw the tissues in the trash; and
  • Clean and disinfect frequently touched objects and surfaces.

Again, while there is currently no vaccine to prevent COVID-19, circulating these good hygiene practices to workers is the next best step for employers to stay proactive during the coronavirus outbreak.

5. Comply with Legal Obligations

Finally, there are certain legal obligations that employers have when responding to the outbreak. For example, if an employer chooses to exclude certain workers from the workplace until the incubation and transmission period has passed, it must not discriminate on the basis of race, national origin, or disability; rather, it should send home all workers that have recently been exposed to the affected regions and pose a direct threat. Employers should also review their health and safety policies and emergency response plans to ascertain that they include infectious disease protocols and comply with the Occupational Safety and Health Act and various health and safety regulations. And of course, employers should be mindful to keep confidential all medical-related information received from workers, in accordance with the Americans with Disabilities Act. For more information and guidance on specific workplace issues and policies related to the coronavirus, please contact your Troutman Sanders employment attorney. We will continue to monitor the coronavirus outbreak and provide updates as necessary.

At the end of last year, we reported that a federal district court had imposed a last-minute temporary restraining order to block California from enforcing its new law (AB 51), which would have imposed criminal penalties on California employers that use mandatory arbitration agreements. That court has now issued a preliminary injunction that continues to block AB 51 until the court decides the merits of the underlying lawsuit, which seeks to overturn AB 51 as preempted by federal law (United States v. BecerraCase No. 2:19-cv-2456 KJM DB). For a recap of AB 51 and the procedural history leading up to this preliminary injunction, please refer to Troutman’s previous client advisory, “Court Temporarily Blocks California’s New Law (AB 51) That Prohibits Employers From Using Mandatory Arbitration Agreements.”

With the preliminary injunction in place, California employers may continue to use mandatory arbitration agreements as a condition of employment without fear of criminal prosecution. The preliminary injunction is expected to remain in effect until resolution of the underlying case, which could take at least a year. California employers should use this time to consider and review their employment dispute resolution goals, including any existing or desired arbitration agreements and practices, and consult with their legal counsel about best practices in drafting, updating, and distributing these agreements.

We are pleased to announce that Troutman Sanders and Pepper Hamilton have agreed to merge effective April 1, 2020. The new law firm, Troutman Pepper Hamilton Sanders LLP, or “Troutman Pepper,” will have more than 1,100 attorneys in 23 offices across the country.

Each firm brings a breadth and depth of experience serving clients in a multitude of areas as well as a complementary industry sector focus, spanning most of the industries critical to the U.S. economy. The Troutman Pepper Labor & Employment team has the depth of knowledge to handle virtually any labor or employment issue, including the following:

  • Class and Collective Actions Litigation
  • Employment Counseling
  • Government Claims and Investigations
  • Immigration
  • Litigation and Dispute Resolution
  • Traditional Labor
  • Employee Benefits and Executive Compensation

Most significantly, the combined firm will offer increased benefits and services to our clients, while retaining the same higher commitment to client care that has been a hallmark of both firms. Benefits for Troutman Pepper clients include:

  • Quality – Each firm prides itself on providing legal services of the highest quality. The combined firm brings together complementary strengths so we can best serve our clients.
  • Value – Clients will enjoy a deeper bench and broader capabilities in key areas — without service disruptions — as we continue to focus on delivering the most value.
  • Innovation – Clients will benefit from innovations in technology and service delivery models, as the combined firm will commit even more resources to improve client services.
  • Reach – With offices in 23 U.S. cities, including eight of the ten top U.S. markets, clients will benefit from increased access to key legal markets.
  • Service – A combined firm means deeper industry ties and experience, which leads to more collaboration and better client service.

We look forward to introducing you to Troutman Pepper.

A few months ago, we covered the news that the federal Department of Labor announced a new final overtime rule, which went into effect January 1, 2020. But the DOL was not quite finished! The DOL stayed busy over the holiday break and has continued this trend in the new year. Below, we summarize these recent updates from the DOL, including updates to the “regular rate” regulations applicable to the Fair Labor Standards Act (“FLSA”); new opinion letters on the FLSA and the Family and Medical Leave Act (“FMLA”) and a new final rule addressing joint employer regulations to help you keep up with the DOL as you begin 2020.

DOL announces new “regular rate” rule

First,  right before the Christmas holidays, the DOL announced a new rule revising the regulations that govern how employers compute overtime payments for salaried, non-exempt employees under the FLSA. The FLSA requires overtime pay of at least one and one half times the “regular rate” for time worked in excess of 40 hours per workweek. The previous regulation did not provide much certainty to employers regarding when benefits and perks had to be included when calculating the “regular rate.” The new rule clarifies which perks and benefits must be (and do not have to be) included in the regular rate of pay, and it comes at a great time, as the DOL reports that the revision is the first significant change to these regulations in nearly fifty years.

The rule goes into effect January 15, 2020.  What do employers need to know? The new final rule clarifies that employers may offer the following perks and benefits to employees without risk of additional overtime liability:

  • the cost of providing certain parking benefits, wellness programs, onsite specialist treatment, gym access and fitness classes, employee discounts on retail goods and services, certain tuition benefits (whether paid to an employee, an education provider, or a student-loan program), and adoption assistance;
  • payments for unused paid leave, including paid sick leave or paid time off;
  • payments of certain penalties required under state and local scheduling laws;
  • reimbursed expenses including cellphone plans, credentialing exam fees, organization membership dues, and travel, even if not incurred “solely” for the employer’s benefit; and clarifies that reimbursements that do not exceed the maximum travel reimbursement under the Federal Travel Regulation System or the optional IRS substantiation amounts for travel expenses are per se “reasonable payments”;
  • certain sign-on bonuses and certain longevity bonuses;
  • the cost of office coffee and snacks to employees as gifts;
  • discretionary bonuses, by clarifying that the label given a bonus does not determine whether it is discretionary and providing additional examples; and
  • contributions to benefit plans for accident, unemployment, legal services, or other events that could cause future financial hardship or expense.

You can find the full text of the new rule here.

DOL issues three new opinion letters

Next, on January 7, the DOL issued three new opinion letters, two of which deal with additional questions under the FLSA. (The third addresses employee counting requirements for a public entity employer for purposes of satisfying one of the eligibility requirements for the FMLA).

The first letter deals with the question of calculating overtime when an employer offers a nondiscretionary, lump-sum bonus earned over a multi-week period (rather than during a specific pay period). The DOL opined that in the hypothetical scenario presented, a $3,000.00 bonus offered to employees who finish a 10-week training program and agree to sign up for an additional 8 weeks, the employer needed to include the bonus amount in the regular rate of pay for employees working a fluctuating amount of overtime during the 10-week training program as a “stay” bonus. The letter also explained that the employer could divide up the bonus equally for each of the 10 weeks for this purpose.

The second letter addressed whether per-project payments could satisfy the salary basis test for purposes of employees classified under the administrative and professional exemptions from the FLSA’s minimum wage and overtime requirements. The letter addressed two different hypothetical per-project payment options and ultimately found both would satisfy the salary-basis requirement – as long as the payments are regular and predetermined.

You can find the full versions of all three letters here (filter to “2020”).

DOL issues final rule updating joint employer regulations

Finally, just this past Sunday, January 12, the DOL announced yet another new rule, this time addressing the regulations applicable to determining joint employer status under the FLSA.

Sometimes, an individual employee performs work that benefits multiple entities. The final rule addresses when such entities may be considered “joint” employers of that individual for purposes of the FLSA – meaning that they may be jointly and severally liable for the employee’s wages or overtime pay. The biggest change to note? The DOL has adopted a new four-factor balancing test to determine joint employer status, and will now weigh the following factors to make the joint employment determination, considering whether a possible joint employer:

  • Hires or fires the employee;
  • Supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
  • Determines the employee’s rate and method of payment; and
  • Maintains the employee’s employment records.

The DOL has noted that no one factor (including the last factor) is alone enough to make an entity a joint employer – instead, it is a case-by-case and fact-specific analysis.

The DOL reports that, like the regular rate rule, revisions to these regulations were a long time coming – as these represent the first substantive revisions to these regulations in over sixty years.

The rule, which applies only to joint employer status under the FLSA (and not any other federal employment laws), will go into effect March 16, 2020. You can find the full text of the new rule (which will be published on the Federal Register January 16, 2020) here.

Curious about how the DOL’s new rulings might impact your business? Please contact a Troutman Sanders employment attorney for personalized guidance and advice.

The start of a new year is a great time for employers to look ahead for changes in the law that will affect their organizations. In this blog post, we will lay out some of the key issues that employers can expect to encounter in the year ahead.

  1. Exempt Salary Increases: On January 1, 2020, the Department of Labor’s updated “white collar” overtime exemption rule went into effect, increasing the minimum salary level for overtime exemption to $684 per week, or $35,568 per year. In addition, some states have minimum exempt salary levels that exceed the federal threshold. California, New York, Colorado, Maine, and Alaska are raising their state minimum threshold this year.
  2. Minimum Wage Increases: While Congress still has not enacted a federal minimum wage increase, states and localities across the country continue to implement new minimum wages in 2020. For example, the minimum wage is now $13/hour for California employers with 25 employees or more (and higher in some California cities); in New York City, the new minimum wage is $15/hour for employers with 11 employees or more.
  3. Independent Contractors: Independent contractor classification continues to be a hot topic in employment law across the country, with many states adopting the stringent “ABC Test” for independent contractors.
  4. Arbitration Agreements: Mandatory arbitration agreements are also seeing new challenges: California’s new law banning arbitration agreements in the employment setting was put on hold by a court at the last minute, but we can expect to see further developments in California and other states in the new year.
  5. Discrimination Laws: New discrimination and harassment laws targeting discrimination based on hairstyle (California), pregnancy (Oregon), and other characteristics will go into effect this year as well.
  6. Pay Equity: New laws in New York and New Jersey both go into effect in January 2020 that will prohibit employers from asking job candidates about their salary history. Other states (Washington state, Alabama, Maine, and Illinois) passed similar legislation last year, and more (Colorado, Georgia, Pennsylvania, and South Carolina) are looking to follow suit soon.
  7. Training Requirements: A variety of states, including New York, Delaware and Maine have already adopted sexual harassment training requirements, and others have adopted new sexual harassment training requirements with deadlines in 2020. In particular, Illinois’ new law requiring most employers to complete annual training went into effect January 1, 2020, and Connecticut now requires employers with three or more employees to provide sexual harassment training to all employees by October 1, 2020. California requires sexual harassment training for all employers but has extended the time for employers with five or more employees to provide training to January 1, 2021.
  8. Leave Laws: States and localities continue to pass generous paid family and medical leave laws. Eligible employees in Washington state will soon be entitled to take up to 18 weeks of paid family and medical leave per year. The District of Columbia is set to follow suit later this year. California, Connecticut, Massachusetts, New Jersey, New York, Oregon, and Rhode Island also have paid family leave laws.
  9. Marijuana and the Workplace: New Mexico and Oklahoma have become the latest to pass legislation prohibiting employers from discriminating against employees because of their status as registered marijuana users; and Nevada and New Jersey each have new laws preventing discrimination based on marijuana use. Meanwhile, New York City has passed an ordinance preventing most employers from conducting any pre-employment testing for marijuana or THC.
  10. Extra Payday Year: 2020 will be a 27-payday year for some organizations. Employers who pay bi-weekly on Fridays and had a payday on January 3, 2020, will have 27 paydays this year instead of the standard 26. 27-payday years occur once every 11 or 12 years for all bi-weekly payrolls, when the one-or two-day shortage of the standard 26 payday shortage catches up, causing a 27th payday to fall within the same calendar year. Employers with a 27th payday in their 2020 calendar should plan for how the extra payday will impact payroll deductions for health benefits, flexible spending accounts, and the cash flow impact the extra payday will have on their year.

Be sure to subscribe to HR Law Matters to stay up to date on these and other employment developments in the new year. As always, if you have any questions about the new developments in employment law and how they affect your organization, Troutman Sanders’ labor and employment attorneys are happy to assist you. Happy New Year!

Join Troutman Sanders at our San Francisco office on Thursday, January 16th for our annual MCLE day. We will discuss employment law updates for 2020, diversity and inclusion, data privacy and an update and review of the U.S. Supreme Court. Mark Payne, Kristalyn Lee, and Christopher Gelpi will discuss employment law updates for 2020. Our keynote speaker will be Jeena Cho, Partner at JC Law Group PC, and co-author of the best selling book, The Anxious Lawyer.

To learn more and to register for the San Francisco MCLE Day, please click here.

Beginning January 1, 2020, California law (known as AB 51) makes it a criminal misdemeanor for employers to require arbitration as a condition of employment. The law specifically prohibits mandatory arbitration of claims under the California Fair Employment and Housing Act (such as for discrimination, harassment, and retaliation) and claims for violations of the California Labor Code (such as for wage payment violations). AB 51 now has been temporarily enjoined pending a preliminary injunction hearing scheduled for January 10, 2020.

On December 6, 2019, the U.S. and California Chambers of Commerce and other national and state organizations filed a lawsuit against the State of California to block AB 51, asserting that this new law is preempted by the Federal Arbitration Act. (United States v. Becerra, Case No. 2:19-cv-2456 KJM DB.) In response to the plaintiff’s request for injunctive relief, the United States District Court for the Eastern District of California filed its Order on December 30, 2019, which prohibits California authorities from enforcing AB 51 until the Court decides whether to issue a preliminary injunction. That hearing is scheduled for January 10, 2020. Courts rarely issue such temporary restraining orders, and they do so only if the plaintiff appears likely to succeed on the merits. In issuing this injunction, the Court explained that in this case, “plaintiffs have raised serious questions regarding whether the challenged statute is preempted by the Federal Arbitration Act as construed by the United States Supreme Court.”

During the period of the injunction, California employers can continue to use valid arbitration agreements as a required condition of employment, but should closely monitor these legal developments and consult with counsel about the advantages and disadvantages of employment arbitration agreements, including how best to draft and implement them.

Now that Black Friday has passed and Christmas lights are up, the winter holiday shopping season is in full swing.  And while you may have survived or even avoided the perils of shopping for the best deals in frenzied environments, there is another type of shopping that lurks for employers: “forum shopping” by employees in wage-and-hour collective actions under the Fair Labor Standards Act (“FLSA”).

As the term suggests, forum shopping refers to the practice of shopping for a particular court or jurisdiction that will provide the most favorable outcome.  This litigation strategy has gained traction over the years by employees when filing wage claims against their employers.  But that practice may soon be limited.  In 2017, the United States Supreme Court in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County, 137 S. Ct. 1773 (2017), addressed the issue of forum shopping in a mass tort action consisting of over 600 plaintiffs, most of whom (592) were non-California residents.  Notably, the Court determined that a California state court lacked specific jurisdiction over the nonresident plaintiffs’ product liability claims because their injury from the product did not occur in California.  Jurisdiction over the state law claims at issue, the Court explained, requires “an affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State.”

Though this decision was a huge victory for large companies that do business nationwide, the Supreme Court expressly left open the question of whether such limitation to forum shopping applies in federal court actions, including collective actions under the FLSA.  Federal district courts have weighed in on this issue and have reached opposite conclusions.  In one group, courts have declined to apply the decision in Bristol-Myers to FLSA collective actions, reasoning that unlike the mass tort state law claims at issue in Bristol-Myers, an FLSA collective action derives from a federal statute that was intended to address wage-and-hour practices nationwide.  According to these courts, applying Bristol-Myers to FLSA collective actions would go against congressional intent because Congress created the FLSA as a mechanism for employees to bring their claims on behalf of other, similarly-situated employees, regardless of whether they are in-state or out-of-state.

Nonetheless, other district courts have found that Bristol-Myers does apply in FLSA collective actions to divest courts of jurisdiction over the FLSA claims of out-of-state employees.  These courts reason that the FLSA does not provide for nationwide service of process and that an FLSA collective action, with its opt-in structure for plaintiffs, is similar to the mass tort action in Bristol-Myers.  In sum, while the district court split on this issue continues to grow, employers are left wondering if and when forum shopping in FLSA collective actions will end.

The answer may come soon.  As of now, two circuit courts (the Seventh Circuit and the District of Columbia Circuit) are considering whether Bristol-Myers applies in federal court actions.  See Florence Mussat v. IQVIA, Inc., et al., No. 19-1204, Oral Argument (7th Cir. Sept. 27, 2019); see also Molock, et al. v. Whole Foods Market, Inc., et al., No. 18-7162, Oral Argument (D.C. Cir. Sept. 25, 2019).  Whether they follow the reasoning of either group of district courts or come up with their own remains to be seen.  But during this winter holiday shopping season, a limitation to forum shopping in FLSA collective actions may be first on employers’ wish lists.