1.No Administrative Exemption for Mortgage Underwriters
In McKeen-Chaplin v. Provident Sav. Bank, 862 F.3d 847 (9th Cir. 2017), the Ninth Circuit reversed the district court’s holding that mortgage underwriters qualified for the “administrative exemption” under the Fair Labor Standards Act (“FLSA”). In particular, the plaintiff alleged that she and other underwriters often worked in excess of 40 hours in a workweek and, therefore, were owed overtime compensation. The defendant argued that mortgage underwriters were exempt under the administrative exemption, and the district court agreed. The Ninth Circuit reversed, and focused on the distinction, imposed by Department of Labor (“DOL”) regulations interpreting the scope of the FLSA exemptions, between “work directly related to running or servicing of the business” and “working on a manufacturing production line or selling a product in a retail or service establishment,” also known as the “administrative-production dichotomy.” According to the DOL, those engaged in management of the business are exempt from the overtime-pay requirements of the FLSA, while those involved in making the goods it sells or performing the services a business provides to the marketplace are not exempt. The Ninth Circuit noted that two other circuit Court of Appeals, the Second Circuit (which ruled underwriters are non-exempt) and the Sixth Circuit (which ruled they are exempt) have reached opposite conclusions.
In Mendoza v. Nordstrom, Inc., the California Supreme Court answered some unsettled questions regarding the state’s day of rest statutes. In short, these provisions of the California Labor Code provide that employees are entitled to at least one day’s rest out of seven. Specifically, section 551 of the Labor Code states that “[e]very person employed in any occupation of labor is entitled to one day’s rest therefrom in seven.” Section 552 states that “[n]o employer of labor shall cause his employees to work more than six days in seven.” Section 556 provides an exception to sections 551 and 552, stating that they “shall not apply to any employer or employee when the total hours of employment do not exceed 30 hours in any week or six hours in any one day thereof.”
At the behest of the federal Ninth Circuit Court of Appeals, the Supreme Court considered three questions, each of which is discussed below.
(1) “Is the day of rest required by sections 551 and 552 calculated by the workweek, or does it apply on a rolling basis to any seven-consecutive-day period?”
Considering the text and history of sections 551 and 552, the Industrial Welfare Commission’s (“IWC”) wage orders, and the statutory scheme of the day of rest provisions, the Supreme Court concluded that employees are entitled to one day of rest each work week (as defined by the employer) rather than one day in seven on a rolling basis. Thus, the Court acknowledged that an employee could be required to work up to twelve consecutive days without violating sections 551 and 552. For example, if an employer defines a workweek as Sunday through Saturday, then an employee could be given a day of rest on the Sunday of Week 1, could be required to work 12 consecutive days, and then could be given off the Saturday of Week 2.
(2) “Does the section 556 exemption for workers employed six hours or less per day apply so long as an employee works six hours or less on at least one day of the applicable week, or does it apply only when an employee works no more than six hours on each and every day of the week?”
With respect to this question, the Court held that the exemption set forth in Section 556 applies only to those employees who never exceed six hours of work on any day of the workweek. If on any one day an employee works more than six hours, a day of rest must be provided during that workweek. Continue reading “And On The Seventh Day…”