July 16, 2019

July 16, 2019

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July 15, 2019

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Recent DOL Guidance Not Entitled to Deference Post-Kisor

In what appears to be the first decision concerning the so-called “20% rule” after Kisor v. Wilkie, a Virginia district court declined to give Auer deference to the U.S. Department of Labor (DOL)’s recent opinion letter on the topic.

As predicted in the wake of the Kisor decision, federal courts have begun to rely upon Kisor as it pertains to Auer deference concerning the 20% rule (or “80/20 rule”). This is a blow to employers who viewed the November 2018 DOL guidance as a positive step.

In Spencer, et al., v. Macado’s, Inc., a potential collective of servers and bartenders raised a dual jobs claim and side work claim, among other things, against the defendant restaurant. The plaintiffs alleged that the restaurant violated the FLSA by requiring them to perform non-tip-producing tasks that were unrelated to their tipped duties (dual jobs). The plaintiffs also claimed the restaurant required them to spend more than 20% of their time on non-tip-producing tasks that were related to their tipped duties (side work).

The defendant moved to dismiss based upon the DOL’s recent opinion letter and its February 2019 revisions to the DOL’s Field Operations Handbook. The letter and revisions essentially eliminated the “20% rule” and clarified that the dual jobs regulation “permits the employer to take a tip credit for any time the employee spends in duties related to the tipped occupation, even though such duties are not themselves directed toward producing tips.”

Relying on Kisor, the U.S. District Court for the Western District of Virginia declined to give the DOL’s recent guidance Auer deference, issuing a resounding defeat to the defendant. The court reasoned that new agency interpretations should not be afforded “Auer deference if the new interpretation ‘creates unfair surprise to regulated parties,’ which ‘may occur when an agency substitutes one view of a rule for another.’”

The court went on to state that “‘significant signs’ indicate that DOL’s new interpretation does not ‘reflect the agency’s fair and considered judgment on the matter in question.’” For instance, the court explained that “the new interpretation ‘reverses 30-year-old agency policy’ and that the issuance of the new interpretation ‘coincided with a change in administration,’ ‘strongly suggest[ing] that the change is a matter of policy, not an effort to determine the meaning of the regulation.’”

The further effects of Kisor on the DOL’s recent guidance will no doubt continue to play out in the district courts – and Spencer may well be a harbinger of things to come. Employers dealing with “20% rule” and “dual jobs” claims would be well served to be mindful of how this trend develops, as plaintiff employees will likely begin to rely upon the arguments made in these cases.

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Peter J. Wozniak Barnes Thornburg Chicago  Labor Employment
Partner

Pete Wozniak is a vigorous advocate who strives to help his clients navigate issues that can be fraught with challenges as painlessly and efficiently as possible. He is a candid and personable counselor, offering his clients direct advice by leveraging his deep experience performing a broad range of outcome critical functions for complex labor and employment matters.

Pete represents clients across a number of industries, including transportation and logistics, restaurants, retail, manufacturing, and temporary staffing. Handling a number of high profile matters, he identifies the...

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Mark Wallin, Attorney, BT, Chicago, Labor Employment
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In order to provide the best counsel, Mark Wallin believes it is his role to understand his clients’ business needs so he can help them determine what resolution will provide the most benefit. His keen ability to understand his clients’ practical concerns allows him to advise on the best path to successfully resolve issues – whether through traditional litigation or negotiated resolution.

In the course of his practice, Mark has focused on providing the highest-level of service to his clients and building long-term relationships. Specifically, he defends employers in a wide range of employment matters including wage and hour class and collective actions, as well as complex, multi-plaintiff and single plaintiff employment discrimination claims brought not only by private plaintiffs but also initiated by the Equal Employment Opportunity Commission (EEOC).

Mark has successfully represented companies of virtually all sizes, litigating matters across multiple areas of the law, from the pleading stage through appeal. He has also represented clients in arbitrations and before administrative bodies.

Mark vigilantly stays abreast of cases, laws, and trends that may impact his clients coming out of the courts, Congress and the state legislature, as well as the U.S. Department of Labor, the EEOC, and state regulatory agencies. He strives to keep a watchful eye on how labor and employment related laws are evolving so as to proactively advise clients.

In addition to his regular legal practice, Mark has undertaken several pro bono cases including trying criminal jury trials in state and federal court, and representing indigent plaintiffs in civil rights matters as part of the federal Trial Bar.

Mark began honing his litigation skill during law school when he interned at the U.S. Attorney’s office for the Northern District of Illinois, where he handled both civil and criminal issues. He also interned for a judge on the U.S. Court of Appeals for the Seventh Circuit, which gave him a unique vantage of seeing the issues from the court’s perspective.

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