Global Compliance Desk – United States

United States Employment Law Updates- Case Highlights 

FMLA Leave For Rotational Employees

Ninth Circuit Court (San Francisco, California) in Scalia v. the State of Alaska, 985 F.3d 742 (9th Cir. 2021) clarified what the term “workweek” means under FMLA Leave for employees who work a rotational schedule of 7 days on followed by 7 days off. 

The FMLA grants eligible employees “a total of 12 workweeks of leave during any 12-month period” to attend to qualifying family and medical needs. AMHS (Alaska Marine Highway System) employs “traditional” employees – those who work a regular 40 hour week with typically five days on followed by two days off, and “rotational” employees – those who work a regular schedule of seven days followed by seven days off. Both types of employees generally work the same number of hours per year and are generally paid the same amount.

As per the State of Alaska – Department of Transportation and Public Facilities (DTPF)’s opinion, a rotational employee working a “one week on, one week off” schedule who takes 12 workweeks of continuous leave must return to work 12 weeks later because both the “on” and “off” weeks count against the employee’s FMLA leave entitlement.

In the Secretary of Labour’s opinion, the employee should return to work 24 weeks later, because a rotational employee’s off weeks cannot be counted as “workweeks of leave. The Secretary stated that only weeks in which an employee was otherwise scheduled to work can count as workweeks of leave. 

The District Court of Alaska held that since rotational employees are not required to be at work during their off weeks, the court concluded that those weeks cannot be added to the entitlement of an employee’s FMLA leave entitlement.

The Decision of the Appeals Court – The State of Alaska (DTPF) appealed the decision and the Ninth Circuit reversed, the judgment stating that when an employee working a “one week on, one week off” schedule takes continuous leave, an employer may count both the on and off weeks against the employee’s FMLA leave entitlement. The court stated in its decision that DTPF’s method of calculating rotational employees’ continuous leave, therefore, does not violate the statute. 

Inclusion of Per Diem Benefits In Calculating Overtime Rate

The Ninth Circuit court (San Francisco, California) in Clarke v. AMN Servs., LLC, 987 F.3d 848 (9th Cir. 2021) determined that per diem benefits functioned as compensation for work rather than as reimbursement for expenses incurred and, therefore, should be included in the regular rate of pay for purposes of calculating overtime pay. 

Facts of the Case – The plaintiffs worked as clinicians for defendant AMN Services, LLC, a healthcare staffing company, and they were paid both a designated hourly wage and an amount denominated a weekly per diem benefit. Traveling clinicians for the company alleged that AMN Services violated state and federal law by excluding their per diem payments from their overtime rate. The payments operated as wages, the employees argued and thus should contribute to their regular rate. The company, however, said that the payments were instead “reasonable reimbursement for work-related expenses.

The district court of California held that there were no relevant material disputes of fact and granted summary judgment in AMN’s favor on the FLSA and stated that there was no cause of action.

The Decision of the Appeals Court – The Ninth Circuit held that the per diem benefits functioned as compensation for work rather than as reimbursement for expenses incurred by traveling clinicians, and the benefits were thus improperly excluded from plaintiffs’ regular rate of pay for purposes of calculating overtime pay.

Liability of Employer due to Incomplete Payroll Records

The Fifth Circuit Court of Appeals in U.S. Department of Labor v. Five Star Automatic Fire Protection, LLC, determined the risk to employers who fail to keep complete timekeeping records of their nonexempt employees’ work.

Facts of the Case – Five Star Automatic Fire Protection, LLC, had employed 53 construction employees who were required to travel to client sites to install and/or repair fire protection equipment. Construction employees typically worked from 7:00 a.m. to 3:30 p.m. The company’s personnel policy required employees to record all the hours they worked. However, the testimony from employees uniformly stated that they were required to clock in between 15 and 30 minutes before the start of their shifts at 7:00 a.m. and/or were either explicitly or impliedly told that they could not record their time prior to 7:00 a.m.

The court found that Five Star failed to keep accurate records of off-the-clock time for the investigative period. Five Star didn’t compensate employees for the required travel time back to the shop. The District Court of Texas agreed with DOL’s calculations and held that Five Star was liable to 53 construction employees for $121,687.37 in back wages, $121,687.37 in liquidated damages, and $2,604.35 for face-of-the-record violations.

The Decision of the Appeals Court – The Fifth Circuit stated that as the produced time records did not show the pre-shift and post-shift times worked, the employees’ testimony provided a reasonable inference of the time that they had worked and the employer could not say as evidence that they lacked accurate records. Five Star’s manual instructed employees to record all of their time, the record shows that the de facto policy was that they should not record off-the-clock, pre-shift, or post-shift time. Five Star stated that they pay construction employees by the hour. Employees must record their own time, by handwriting on the company timesheets how many hours they worked each day.

The employees at Five Star were asked to only include the total number of hours worked at a job site. So when an employee has worked at two or more locations in one day, he does not record his start and stops time for each location nor does he indicate the order in which he worked at those places.

The Fifth Circuit affirmed the District Court’s decision to award back pay and give liquidated damages to the employees.

Shreya Bhattacharya
Shreya Bhattacharya
A labor and employment lawyer at Replicon who specializes in global compliance. Replicon provides award-winning products that make it easy to manage your workforce. Replicon is an industry leader in global compliance and has a dedicated team which pro-actively monitors international labor regulations for ensuring proper adherence with specific country rule requirements.
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