Jottings By An Employer's Lawyer

Tuesday, August 03, 2010

CBA-FLSA-State Law? Is It Like Rock-Paper-Scissors?

Unfortunately for companies that operate in more than one state or are intently focused on the Fair Labor Standards Act, the answer is no.

Unlike the kid's game,  where the winner is variable, when deciding wage and hour compliance questions, the answer invariably seems to be -- state law tops all.

Judge Easterbrook's short 7 page opinion in Spoerle v. Kraft Foods Global, Inc. (7th Cir. 8/2/10) [pdf] is a good example and (surprisingly) the first appellate decision to address at least one variation of this non-preemption issue. The question was what happens when a CBA which specifically excludes donning and doffing from time worked as permitted under Section 203(o) of the FLSA, runs into a state statute which does not have a similar exclusion? The answer under Section 218(a) according to Judge Easterbrook: state law prevails; employer loses. Here that translates to a $2.2 million dollar judgment on behalf a group of employees against the employer.

This may be the first for this specific issue, but it is not the only time it is a problem. See Union Bargaining Agreements Likely Cannot Waive Overtime Pay Rights, at the Overtime Advisor for a similar issue brewing in Nevada.

If I were rewriting wage and hour law, and I wish someone would ask me to do so, starting with Section 218(a) might not be a bad place to start. Compliance for companies that truly want to comply is hard enough when it is one law, but one law and 50 possible variations is a little too much federalism at times.

If it were truly protecting individuals from abusive treatment that would be one thing. But here, Local 538 of the UFCW, the employees' representative, and the company agreed  that donning and doffing time would not be paid. No doubt elsewhere in the CBA that benefit to the company was offset by a benefit to employees, more than likely higher hourly wage rates.

So who really benefits from this $2.2 million decision?

The workers get all that they bargained for, plus a substantial windfall. Lawyers for the company and the plaintiffs (assuming that the judgment is not reversed by the Supreme Court) will have been well compensated. The Company will be out $2.2 + million dollars, which in classic economic terms likely means consumers will now have to pay more for their products.

I am sorry I must have missed something. Why is any of this a good thing?


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