1. Trending Issues in FLSA
Litigation
Who qualifies as exempt, who is
liable if you get it wrong, and who
decides where you contest it?

2. Proposed Changes for White
Collar Exemptions
Or, “The End of the World As We Know It”
What did happen?
► March 13, 2014: President Obama instructed
the Department of Labor to review the “White
Collar Exemptions,” which comprise the
executive, administrative, professional
(including computer professionals), and
outside sales exemptions.

3. What Can We Expect?
Modernize  Raise the Minimum Salary
Requirement
► Most likely change
Modernize & Streamline  Job Duties Test
► Reflect modern economy
► Clarify ambiguous phrases that regularly result in
large-scale litigation
► May result in broadening of exposure that
previous Administration attempted to limit
(deductions from salary, for example)

4. Dovetails with GAO Findings
FLSA Litigation is increasing sharply
Guidance from the Wage and Hour
Division is declining
Everyone wants more interpretation of the
exemption regulations

5. Changes Likely
FLSA White Collar Exemptions are a focus
of the Administration
Increasing wages is a focus of the
Administration
This is another way to affect wages, apart
from raising the minimum wage

6. Can You Inherit Liability?
You’ve been prudent
You’ve reviewed classification of workers
carefully
You’ve erred on the side of caution
Can you still end up with an FLSA
headache?

7. Successor Liability in Asset
Purchase
Traditionally, seller’s liabilities do not pass
to buyer in an asset deal
But, a buyer may be liable for a seller’s
federal labor and employment liabilities if
found to be a successor employer
Began with Supreme Court application in
NLRB case
The MacMillan substantial continuity test
arises from a Sixth Circuit case

8. Successor Liability and the FLSA
It’s trending
Three Circuit Courts of Appeal have applied
the federal common law standard for
successor liability to FLSA claims
► 3d, 7th, and 9th
The District Court for the Middle District of
Tennessee has also applied this standard to
FLSA claims
Three of the four cases decided in last 15
mos.

9. What Does This Mean?
Increasingly Difficult to Avoid Liability for
Improperly Classifying Workers as Exempt
 Failing to Pay them Overtime
Those tasked with pre-merger diligence
and post-merger implementation of
employment issues must be aware they
may inherit not only the practical problems
of integrating a misclassified workforce,
but also liability for past mistakes

10. Federal Court Lawsuit or
Arbitration?
Current Status under D.R. Horton
► Fifth Circuit Ruling
► NLRB response
NLRB’s current position
Where does that leave us?
Pros and Cons of arbitration to consider
“Arbitrability Issues” – Who decides?

11. Not Just Federal Concerns
Tennessee is emphasizing enforcement
employer practices that result in a failure
to pay overtime, unemployment insurance
tax premiums, and workers’ compensation
► Typically, misclassified as independent
contractors or paid under the table