While Texas is considered pro-employer, the state has seen a significant increase in Fair Labor Standards Act employment litigation so far in 2020. Labor & Employment partner Jamila Brinson joins to explain the rise in litigation cases – particularly in the Southern District of Texas. Of course, the COVID-19 pandemic has played a significant role in the rise, but employees are finding creative approaches to bringing their lawsuits, which employers should understand in order to reduce their overall risk to these suits.
Greg Lambert: Hi, everyone. I’m Greg Lambert, it’s September 2nd, and this is Jackson Walker Fast Takes.
While the state of Texas has a reputation for being pro-employer when it comes to employment disputes, there is definitely a rise in the number of Fair Labor Standards Act, or FLSA, litigation this year. So I asked Jackson Walker Labor & Employment partner Jamila Brinson to come back onto the show to discuss the topic.
Jamila, thanks for taking the time to talk with me.
Jamila Brinson: Greg, thanks for having me.
Greg Lambert: What are some of the trends that you’re seeing in the Texas wage-and-hour litigation so far this year?
Jamila Brinson: Well, as you know, 2020 has just been a tough year all over. What we’re seeing is just a general increase in the number of FLSA lawsuits that are filed all over Texas, particularly in the Southern District of Texas. I think a lot of that has to do with the fact that there have been a lot of impact on the economy caused by COVID-19. So, where you may have had issues or an employee would have identified that they had issues with regard to whether they were paid as an independent contractor or as an employee, or whether or not they received the sufficient amount of overtime or overtime at all, an employee or worker may not have been concerned about it because they have employment. Now, because you have so many people who are unemployed, they’re going back and they’re, you know, looking at their pay stubs, trying to figure out if they’ve gotten anything that they are entitled to. So, we have seen definitely an increase there.
Greg Lambert: Alright, well, speaking of the pandemic and some of the changes—I know that there’s been shifts in more employees working from home, changes in just the style of work. What are some of the common issues that employers need to understand?
Jamila Brinson: Employers should be very concerned and focused on how employees are working from home and whether or not they are correctly keeping track of their time. One of the things with the FLSA is that it focuses on whether or not an employee is working more than 40 hours in a workweek, and if they are, whether or not they are receiving overtime, which is one-and-a-half times what their hourly rate is. So, with employees working from home, it’s almost impossible to understand how much time is actually going in to work. If you have an employee who is exempt versus nonexempt, then that concern should increase for the employer. So, employers definitely need to have in place policies and procedures that focus on how an employee keeps track of their time while working from home.
Greg Lambert: So, you were in a recent Texas Lawbook article where you mentioned that traditional tools, such as arbitration agreements containing collective action waivers—especially in the oil and gas industry here in Texas—are not as solid a barrier to the FLSA suits as they once were. What’s allowing this sort of shift?
Jamila Brinson: You know, I think employers should still feel confident that they can utilize mandatory arbitration agreements with class and collective action waivers to decrease the risk of liability in FLSA matters. But it is true that we’ve seen more cases that have been filed by workers, particularly in the oil and gas industry, that are trying to do an end run around those agreements. And it’s typically in the case where it’s a worker who is employed by a staffing company and they’re providing services to a third party. So, employers need to really take a good look at their relationships with their subcontractors to ensure that there’s still some protection that exists there. Of course, you have indemnity agreements that exists between contractors and subcontractors, but because of the types of cases that we are seeing where these workers instead of suing their direct employer or their staffing company, they’re going around and suing the contractor or the main company. I think it’s important for those employers to really analyze what they have in place that will continue to minimize their risk under the FLSA.
Greg Lambert: Are there any other issues that listeners should know about at this time?
Jamila Brinson: Well, employers should still feel confident utilizing mandatory arbitration agreements with class and collective action waivers, especially if the employer has a pending collective action filed against it. In late 2019, the National Labor Relations Board decided a case called Cordua Restaurants Inc. that originated here in Houston actually, where the board held that employers may modify their mandatory arbitration agreements to prohibit employees from opting into pending collective actions, and that decision was big. It gave employers the right to force employees to sign these modified arbitration agreements by threatening discharge if the employee refused. So, employers have that right now and they can condition employment on the employee’s execution of these agreements. So, with regard to new employees that come in, they can condition employment on the execution of that agreement. So, that decision by the National Labor Relations Board was a major one, and it rides on the coattails of the U.S. Supreme Court 2018 decision in Epic Systems, which upheld the enforceability of arbitration agreements with class action waivers in employment. Employers have a lot of procedural mechanisms at their disposal with regard to FLSA claims, but they should still keep in mind that employers cannot retaliate against employees or discipline them or discharge them for filing or initiating or taking place in any type of class action or collective action.
Greg Lambert: Alright, well, Jamila Brinson, thanks again for taking the time to talk with me.
Jamila Brinson: Thank you, Greg.
The music is by Eve Searls.
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Wage and Hour Litigation Back on the Rise in Midst of COVID-19 »
The Texas Lawbook (subscription required) | In this article, Jamila Brinson discusses the U.S. Supreme Court ruling in Epic Systems Corp. v. Lewis that arbitration provisions can be included in employment contracts with respect to collective action claims.