Food And Beverage Law Update: October 2015

Nathan Adams is a Partner and Joshua Aubuchon is an Associate in the Tallahassee office. Cynthia Burnside is a Partner in the Atlanta office.

Labor and Employment

Plaintiff Wage and Hour Lawsuits Continue to Climb

Wage and hour litigation has become what some call the new "workplace revolution." Data from the Federal Judicial Center indicates that federal wage and hour lawsuits jumped an estimated 432 percent in 20 years. NERA Economic Consulting reports that an increasing proportion of the settlement dollars are related to food and food services. Total wage and hour settlement payments were $445 million in 2013 and $400 million in 2014, for a total since 2007 of more than $3.6 billion. On average, companies paid $5.3 million to resolve a case in 2014 with a median settlement value of $2.4 million. The settlement value per plaintiff per class year has fallen from a peak of $1,475 in 2011 to $686 in 2014. The most common claims are for overtime violations. The most wage and hour litigation is occurring in California, Florida, New York and Texas. Companies should consider obtaining wage and hour legal risk analysis and recommendations if they have not yet sought them.

NLRB's "Joint Employer" Doctrine Liberalized

In Browning-Ferris Indus. of Cal., Inc. and FPR-II LLC and Sanitary Truck Drivers and Helpers Local 350, Case No. 32-RC-109684, 2015 WL 5047768 (NLRB Aug. 27, 2015), the NLRB, by a 3-2 party-line vote, expanded the "joint employer" doctrine in a fashion certain to impact franchisors in the restaurant industry and employers more broadly if the doctrine is adapted for use in connection with Title VII and related state law claims. This latter threat became manifest in Nardi v. ALG Worldwide Logistics and Transp. Leasing Contract, Inc., No. 13 C 8723, 2015 WL 5462101 (N.D. Ill. Sept. 16, 2015), as amended, 2015 WL 5772473 (N.D. Ill. Sept. 21, 2015).

Browning-Ferris Industries, a recycling company, used a temporary staffing agency called Leadpoint Business Services to provide workers. The temporary labor services agreement stated that Leadpoint was the sole employer of the personnel it supplied. A Teamsters local tried to organize the employees, but did not just want to negotiate with Leadpoint; it wanted Browning-Ferris to qualify as a joint employer. The National Labor Relations Board (NLRB or the Board) used the case to announce a new standard for joint employer liability, replacing the "direct and immediate" control standard. Under the new standard, the NLRB may find that two or more statutory employers are joint employers of the same statutory employees if they "share or codetermine those matters governing the essential terms and conditions of employment."

Under the new test, the Board's initial inquiry will be whether there is a common law employment relationship with the employees in question. If this common law employment relationship exists, the inquiry turns to whether the putative joint employer possesses sufficient control over the employees' essential terms and conditions of employment to permit meaningful collective bargaining. The NLRB will no longer require that a joint employer not only possess the authority to control employees' terms and conditions of employment, but also exercise that authority. Reserved authority to control terms and conditions of employment, even if not exercised, will now be relevant to the joint-employer inquiry. Nor will the Board require that, to be relevant to the joint employer inquiry, a...