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Three Wage and Hour Predictions for 2022: Pay Incentive Class Actions, Cryptocurrency Pay, and Multistate Class Actions – Ogletree Deakins

With the calendar having turned to 2022, it is time to look into the crystal ball and make a few predictions for the year ahead related to the wage and hour world.
Class and Collective Actions Concerning Hiring and Retention Incentives Will Increase
In 2021, many employers across the country experienced starkly increased competition for workforce talent. Whether it was convincing existing employees not to participate in the “Great Resignation” or persuading candidates with multiple job options to join the home team, companies often relied on financial bonuses to curry employment favor. The increased use of these financial incentives may lead to increased class and collective action lawsuits regarding these payments. Specifically, increased wage and hour litigation activity may address whether such enticements were nondiscretionary bonuses that needed to be included in the overtime rate calculations for nonexempt employees. Employers may want to consider auditing new types of payments they made over the past year for compliance with wage and hour law requirements.
More Employers Will Receive Requests for Compensation in Cryptocurrency
In many ways, 2021 could be described as the year of cryptocurrencies. Two of the most well-known cryptocurrencies reached all-time high values. Multiple celebrities began endorsing cryptocurrencies. Newly elected mayors in Miami and New York City even promoted taking paychecks in cryptocurrency. All of these headlines are sure to attract the attention of employees and lead to questions about potential cryptocurrency compensation. Employers that consider entertaining such inquiries may want to consider whether and how any payments may be regulated by the Fair Labor Standards Act (FLSA) or state laws. For example, several states require wages to be paid in United States currency, which could limit an employer’s ability to pay in cryptocurrency. Wage and hour laws and regulations will be key to whether an employer can provide what may be a highly sought employee incentive in 2022.
Fewer Multistate Collective Actions
Just over halfway through 2021, the Sixth Circuit Court of Appeals issued a decision that significantly limited what began as a multistate collective action lawsuit. The court held that a federal court cannot exercise personal jurisdiction over a corporate defendant with respect to the claims of nonresident opt-in plaintiffs who join an FLSA collective action when the claims are not connected to the defendant’s activities in the forum state. A day later, the Eighth Circuit Court of Appeals similarly excluded collective action claims with no connection to the state in which the action was filed. Since then, multiple district courts outside the Sixth and Eighth circuits have followed the reasoning of these decisions. This trend may continue with multistate employers citing these decisions to narrow the potential list of putative plaintiffs in collective actions.
On June 25, 2012, the U.S. Supreme Court ruled in Arizona v. United States that several provisions of Arizona’s immigration law (S.B. 1070) could not be enforced because federal immigration law preempts state laws regarding control of immigration when there is a conflict. Provisions of the Arizona law that imposed criminal penalties on unauthorized workers, allowed warrantless arrests of aliens suspected of being unauthorized, and intruded on federal alien registration requirements may not be enforced.
The Third Circuit Court of Appeals held that a union employee’s harassment claim was preempted by Section 301 of the Labor Management Relations Act (LMRA), rejecting the employee’s claim that the dispute could be resolved without interpreting the parties’ collective bargaining agreement (CBA). The parties’ CBA authorized the union to directly negotiate “deal memoranda” on behalf of its members, which contain additional provisions specific to the employer and are signed by both the employee and employer.
On July 9, the New York Department of Labor reissued emergency regulations (first adopted on April 28, 2010) which extend the effective date of the emergency regulations to October 6, 2010. As we previously reported in the May 2010 issue of the New Jersey eAuthority, these new regulations: 1) clarify circumstances under which various types
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