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Silent Wisconsin Law Provides Basis for Overtime Claim Despite Federal Exemption

Labor & Employment Alert Brian A. Hartstein, Sean M. Scullen, Fred Gants

A recent Seventh Circuit case, Spoerle, et al. v. Kraft Foods Global, Inc., Case No. 09-2691, addressed the question of whether Section 203(o) of the Fair Labor Standards Act ("FLSA"), which allows a collective bargaining agreement ("CBA") to exclude time spent changing into and out of work clothes ("donning and doffing") from hours worked, preempts a state law that lacks an equivalent exception.

Kraft Foods required employees who prepare meat products at its Madison, Wisconsin plant to wear safety gear and under the terms of the CBA between Kraft and the Union, the time spent donning and doffing that gear was noncompensable.  This type of agreement is permissible under Section 203(o) of the FLSA. The plaintiffs sought compensation for this time, making two arguments in support of their claim. They argued:

  1. The protective gear was not "clothing" covered under Section 203(o).

  2. Since Wisconsin's own wage and hour legislation lacks a Section 203(o) equivalent, the time was compensable.

Judge Easterbrook quickly disregarded the first argument, citing the Fourth Circuit's holding in Sepulveda v. Allen Family Foods, Inc. 591 F.3d 209 (4th Cir. 2009) (holding that one need not exchange one item of clothing for another to be considered "changing" under Section 203(o)) without further discussion. However, Judge Easterbrook agreed with the district court's finding that the lack of an equivalent exception under Wisconsin law, meant that the "donning and doffing time counts toward the work week (and overtime rates) if state law so provides," and that this was not preempted by Section 203(o).

The Court's reasoning relied on a three-point analysis of the plain language of Section 203(o); Judge Easterbrook first found that Section 203(o) specifically references only Sections 206 and 207 of the FLSA, which govern the minimum wage and overtime respectively, and not state laws. Second, he stated that states are free to set higher hourly wages or shorter periods before overtime is necessary under Section 218(a) of the FLSA. Third, he noted that nothing in Section 203(o) limits the overtime requirement. Based on those reasons, Wisconsin's more stringent standard for donning and doffing "working time," without an exception for collectively bargained results, should apply. Judge Easterbrook gave the example of a collective bargaining agreement that set a wage for its employees that was higher than the federal minimum of $7.25 but below a state's required hourly rate (for instance $8.25 in Illinois), noting that no one would argue the state's more stringent minimum wage was preempted by the lower federal rate. The court went on to state that "[n]othing that labor and management put in a collective bargaining agreement exempts them from state laws of general application" and that Wisconsin's wage and hour statute, which provides no exception, was such a law.

Clearly the court's ruling in this case means that all Wisconsin employers who are not compensating employees for donning and doffing time in accordance with provisions in their collective bargaining agreements should consider changing their practices and should seek legal assistance in doing so. In addition, employers in all states should be wary of relying upon bargained noncompensable time for donning and doffing, especially if state law requires payment for such time or, like Wisconsin, lacks an exception similar to Section 203(o). Employers with multistate operations should seek the advice of counsel to assess their risk.

This ruling comes on the heels of a recent Administrator's Interpretation of Section 203(o) by the U.S. Department of Labor's Wage and Hour Division ("WHD"). This new interpretation reverses the WHD's prior position and states that employers may not treat time spent donning and doffing protective equipment as unpaid time, even when the applicable collective bargaining agreement provides for nonpayment of such time.

Wage and hour compliance is vital and the risk of noncompliance is significant, especially given this recent
ruling, a renewed emphasis on WHD enforcement, and the prevalence of wage and hour collective and class action lawsuits. If you have any questions about these issues, or if you would like assistance in reviewing your personnel and pay policies and practices, please contact Brian Hartstein at (312) 715-5211 / [email protected]; Sean Scullen at (414) 277-5421 / [email protected]; Fred Gants at (608) 283-2618 / [email protected] or your
Quarles & Brady Labor & Employment attorney.