OVERTIME UPDATE: National Retailers Hit With Meal Break Litigation and the “Black Swan” Internship Saga Continues
This edition of Overtime Update features a refresher on employee meal breaks in light of some recent potential class action lawsuits against national retailers and discusses the latest developments in the case of Glatt v. Fox Searchlight Pictures, Inc. (Glatt, being a former intern for the company that produced the 2010 Oscar-nominated film "Black Swan"). Each topic is discussed separately below. National Retailers Hit With Meal Break Litigation
Retail and service establishments live by the mantra: the customer is always right. A belief that holds a close second: the customer is probably in a hurry, too. So, when the customer is ready to check out at a cash register or needs help finding a dressing room or has questions about this week’s sales or promotional items, most employees will quickly try to meet those customers’ needs. And, of course, that’s not a legal violation. But what if the employee was on his or her meal break at the time?
The federal Fair Labor Standards Act (the "FLSA") does not require employees to receive meal breaks. It does, however, require that all covered, non-exempt employees be paid for all hours worked. The U.S. Department of Labor, which enforces the FLSA, takes the position that bona fide meal periods (typically lasting at least 30 minutes) are generally not compensable, provided the employee is "completely relieved from duty" for the purpose of eating regular meals. Conversely, the employee is not relieved from duty if he or she is required to perform any duties, whether active or inactive, while eating. Some states also impose their own requirements and restrictions on meal breaks (including, California, Illinois, and New York), which the DOL summarizes here: http://www.dol.gov/whd/state/meal.htm.
A couple of recent lawsuits suggest that the scenario described above, in which employees (either through their own volition or by being asked to handle discrete tasks) worked at least during if not through their meal breaks, is not entirely uncommon. Just ask clothing giant Brooks Brothers. In June 2013, Brooks Brothers Group, Inc. was hit with a putative class action alleging that the company, among other things, deprived employees of proper meal breaks in violation of state law. The named plaintiff in that case, a non-exempt sales associate and manager, alleged that Brooks Brothers knew or should have known that the plaintiff and the other class members should have been entitled to additional pay required under state law when they did not receive a timely uninterrupted meal period. They also allege that Brooks Brothers did not staff sufficient employees to meet customer service demands and did not properly coordinate employee schedules to permit compliant meal periods.
Another company hit with a lawsuit in June 2013 alleging that it failed to provide employees with proper meal breaks: Pottery Barn. In that case, the named plaintiff alleged that he and his putative class members were denied meal breaks required by state law and/or required to work during those breaks without compensation. These cases serve as a reminder that low staffing levels or other business conditions that require non-exempt employees to forfeit all or part of a required meal break, or the failure to compensate employees properly for work performed during such breaks, could potentially spawn litigation.
Glatt v. Fox Searchlight Pictures, Inc.
In the last edition of Overtime Update (available here: http://www.troutman.com/overtime-update-what-the-supreme-courts-genesis-healthcare-ruling-means-for-you-and-assessing-whether-an-unpaid-summer-internship-is-legal-06-10-2013/), we reported that several employers have recently been sued for wages owed by their former unpaid interns. In June 2013, a federal judge handed down a noteworthy ruling in the case of production interns Eric Glatt and Alexander Footman, who sued Fox Searchlight Pictures, Inc., a division of Twentieth Century Fox, for alleged unpaid wages owed to them and others for production work performed on the set of the film "Black Swan." In case you missed it, here’s the back story:
Glatt and Footman sued Fox Searchlight, in September 2011 in a federal court in New York alleging that they did basic tasks (e.g., preparing coffee and expense reports) and that, through the use of a tightly-controlled budget, the film was produced for approximately $13 million and grossed more than $300 million. The lawsuit alleged that Fox Searchlight violated the minimum wage and overtime provisions of the FLSA and state law. On June 11, 2013, Judge William H. Pauley III ruled that the plaintiffs were "employees," not "trainees" or "interns," and should have been paid. Judge Pauley discussed the six factors cited by the U.S. Department of Labor for evaluating whether an employee is properly classified as an unpaid intern (see our last edition of Overtime Update, linked above). In discussing one of those factors (whether the internship was for the benefit of the interns), the court reached this important conclusion:
Undoubtedly, Glatt and Footman received some benefits from their internships, such as resume listings, job references, and an understanding of how a production office works. But those benefits were incidental to working in the office like any other employee and were not the result of internships intentionally structured to benefit them. Resume listings and job references result from any work relationship, paid or unpaid, and are not the academic or vocational training benefits envisioned by this factor.
The court also noted that other factors favored the finding of an employment relationship, including that Fox Searchlight did not contest having derived an immediate advantage from Glatt and Footman’s work. While an appellate court may view the case differently, the case is nonetheless a reminder that unpaid internships, particularly with for-profit employers, present legal risks. For assistance in evaluating potential wage-and-hour risks for your company, please contact a member of Troutman Sanders LLP’s Labor & Employment Team.
© TROUTMAN SANDERS LLP. ADVERTISING MATERIAL. These materials are to inform you of developments that may affect your business and are not to be considered legal advice, nor do they create a lawyer-client relationship. Information on previous case results does not guarantee a similar future result.