Last week U.S. District Judge Jeffrey T. Miller approved a $1 million settlement agreement in a class action lawsuit which alleged that GE Osmonics Inc. (GEO) denied its workers wages and breaks to which they were entitled under state law. As part of the settlement, Judge Miller certified the class of 156 former and current employees and named plaintiff Silvia Morales as the class representative.

The suit was originally filed in a state court in California in February 2010 and later transferred to the U.S. District Court for the Southern District of California in May 2010. The suit alleged that GEO’s pay policies disfavored nonexempt workers and that such workers were routinely paid less than what they earned. According to the complaint, the company attempted to “increase profitability by creating and implementing a system that fails to properly compensate its California employees for off-the-clock work and overtime and for missed and/or interrupted meal and rest breaks and vacation pay.”

The settlement agreement also provides $250,000 in attorneys’ fees to the plaintiffs, $13,500 in claims administration fees and an additional $10,000 as a service award for Ms. Morales. Approval of the settlement is not a finding of wrongdoing nor is it an admission of any wrongdoing by GEO.

GEO was acquired by General Electric Company in 2002 and is manufacturer of equipment used in water filtration and treatment systems.

Last week a Nike Inc. contractor factory in Indonesia agreed to pay workers over $1 million to settle allegations that the shoe manufacturer forced workers to perform a daily hour of overtime work without compensation.

Workers at the Nike contractor, PT Nikomas Gemilang IY, allege that they were routinely forced to perform an hour of overtime off the clock in order to meet targeted production levels. Local unions complained that the workers performed nearly 600,000 hours of unpaid overtime over the past two years. After 11 months of negotiations, the company agreed to settle with the workers for approximately $1 million. Each worker involved in the settlement – 4,500 – will be entitled to receive approximately $222.

A Nike spokesman, Brian Strong, commented that “the decisive actions taken by the PT Nikomas Gemilang IY plant clearly demonstrate how seriously they are taking the allegations of workplace misconduct” and that “Nike commends the factory on their action plan and efforts to correct inadequacies in current policies designed to protect the rights of workers.”

Strong also indicated that the factory will take further steps to ensure that workers’ rights are respected in the future and announced that the factory will hire an outside organization approved by the Fair Labor Association – a Washington, DC-based advocacy group – to monitor the workers’ conditions.

According to reports, more than 160,000 people are involved in the manufacture of Nike products in Indonesia.

Last week, health supplement retailer Vitamin Shoppe Industries Inc. (“Vitamin Shoppe”) settled the final portion of a class action lawsuit which had alleged that the company mislabeled many of its store clerks as managers in an attempt to avoid paying them overtime wages.

The settlement involves an agreement between Vitamin Shoppe and the suit’s lead plaintiff, Julio Vasquez, who alleged that the company violated the Fair Labor Standards Act (FLSA) by giving him the title of store manager in order to avoid paying him and others overtime pay.

Vasquez brought suit in the U.S. District Court for the Southern District of New York in November 2010 and claimed that Vitamin Shoppe listed him and over 400 other store clerks as “store managers” so the company could pay the clerks salaries and not be liable for paying overtime wages required by the FLSA.

In July 2011 Judge Laura Taylor Swaine decided not to certify a class of over 400 employees from across the company’s branches in 40 states but instead certified a smaller class consisting of employees from just seven of Vitamin Shoppe’s stores clustered around the New York City area.

In her ruling, Judge Swain wrote that the “plaintiff [did] not meet his burden” of showing that Vitamin Shoppe had misclassified its store clerks across all of the company’s locations sufficient for nationwide class certification.

The current settlement does not reveal the terms of the agreement apart from stipulating that it resolves the lawsuit in its entirety.

In Sullivan v. Oracle, the United States Court of Appeals for the Ninth Circuit reversed the granting of summary judgment by the district court, holding that the California Labor Code appliesy to nonresidents who perform work in California.  California wage and hour laws are generally provide more protection for workers than federal laws; for instance, the minimum wage in California is $8.00 per hour while the national minimum wage is $7.25 per hour.

Oracle is a Delaware corporation with its primary place of business in California, best known for its database management software.  The three plaintiffs are “instructors” – to use Oracle’s term – who lived outside of California but trained customers in California and other states on how to use Oracle software.  They allege Oracle misclassified them as “teachers,” a class of workers exempt from the generous overtime provisions of the California Labor Code.

The Ninth Circuit initially held in favor of the plaintiffs, but ultimately sought the opinion of the California Supreme Court in answering the following question of state law:

Does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs in the circumstances of this case, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week?

Concurring with the Ninth Circuit, the California Supreme Court answered yes, holding that nonresidents who work in California are entitled to overtime pay pursuant to the California Labor Code.

Last week the Obama administration unveiled a proposal to extend minimum wage and overtime protections to approximately two million home health aides and other in-home care providers. The Department of Labor released a Notice of Proposed Rulemaking that includes proposed changes to the companionship and live-in worker regulations of the Fair Labor Standards Act (FLSA).

When Congress passed the FLSA in 1938, it established a federal minimum wage and a mandate to pay overtime for hours worked exceeding 40 hours per week. However, some job categories were not initially covered by the FLSA, including domestic service workers employed directly by a household. In 1974 Congress amended the law to extend the FLSA’s wage protections to nearly all domestic service workers but included an exemption for workers who provided companionship for the elderly and for babysitters.

The Department of Labor cited the “dramatic transformation” of the home healthcare industry since 1975, the rapidly increasing demand for in-home care, and the relatively stagnant wage growth of in-home care employees as reasons for the proposed rules. The Department maintains that today’s workers who are employed by home care staffing agencies are not the sort of workers that Congress intended to exempt from FSLA protection when it passed the companionship exemption (i.e. babysitters), but rather are “professional caregivers” who perform medically-related tasks for which training is typically a requirement and should be entitled to FLSA protections.

The issue gained attention in 2007 when the Supreme Court decided in Long Island Care at Home, Ltd. v. Evelyn Coke, that a home care aide who worked up to 70 hours per week did not qualify for overtime compensation under the current FSLA regulations. The court said that any changes to such regulations must come from either Congress or the Department of Labor.

While the proposed changes will broaden FLSA regulations to ensure that home health workers are subject to federal minimum wage and overtime law, the proposed rules still exempt from minimum wage and overtime regulations some workers who are employed as companions by individuals for activities such as engaging in hobbies and talking walks. Under the definition of the proposed rules, companionship services would be limited to activities that directly relate to offering ‘fellowship’ and protection to those who are not capable of caring for themselves. Only workers whose duties include providing personal care (e.g. assistance with dressing and grooming) less than 20% of the time would remain exempt from the FLSA’s minimum wage and overtime protections.

Among the other changes in the proposed rules is a requirement for the employers of live-in domestic workers to keep track of the specific hours that such employees work, instead of merely reaching a work agreement with employees. The proposed rules also clarify that workers employed by third-party employers – such as staffing agencies – are not exempt from the minimum wage and overtime protections.

Currently state minimum wage and overtime protection laws for in-home care providers vary widely. For example, 16 states ensure that most in-home care workers receive minimum wage and overtime protection and 5 states and the District of Columbia require that such workers receive the minimum wage but do not mandate overtime eligibility. However, according to the Obama administration, 29 states do not give home health care workers either minimum wage or overtime protection.

The public is invited to submit comments on the proposed rules at www.regulations.gov. Further information including Frequently Asked Questions answered by the Department of Labor and a Comparison of Current vs. Proposed Companionship Regulations chart can be found at http://www.dol.gov/whd/flsa/companionNPRM.htm.

Alaska residence managers who are employed to house and care for mentally ill children petitioned the Supreme Court to reverse the Ninth Circuit’s ruling that the residence managers were not covered under the Fair Labor Standards Act (FLSA).  The FLSA requires that employers pay employees  a minimum wage and overtime pay.  Congress amended the FLSA in 1966 to cover employees of hospitals, schools and institutions “primarily engaged in the care of the sick, the aged, the mentally ill or defective who reside on the premises of such institution.”

The appellants assert in their brief that they provide “care” for the mentally ill children by administering psychotropic medications and by providing for the children’s basic needs, working up to 98 hours a week and being on duty 24 hours a day, seven days a week.  They further argue that the residence housing the mentally ill children constitutes an “institution” for the purposes of the FLSA, because the federal Medicaid regulations define an “institution” as “an establishment that furnishes. . . food, shelter, and some treatment or services to four or more persons unrelated to the proprietor.”  Numerous other federal and state statutes (including Alaska’s) would also define these homes as “institutions.”

Should the Supreme Court grant certiorari and agree to hear this case, the Supreme Court could very well decide the wage and tax treatment for employees throughout the country – there are currently similar facilities in every state.  The case is Probert v. Family Centered Services of Alaska, Inc.

The Supreme Court agreed to hear the appeal of a Ninth Circuit ruling that the Fair Labor Standards Act’s outside sales exemption applies to GlaxoSmithKline (GSK) pharmaceutical sales representatives and that they are not entitled to overtime compensation.  The Ninth Circuit’s opinion directly conflicts with a Second Circuit opinion where that court held the exact opposite – that the outside sales exemption did not apply to pharmaceutical sales representatives at Novartis Pharm. Corp. and Schering-Plough Corp.

The GSK sales representatives are also asking the Supreme Court to advise federal courts to give deference to the amicus briefs filed on by the U.S. Department of Labor supporting thier position that the outside sales exemption does not apply to them.

Since the Supreme Court has yet to rule on the outside sales exemption or any other white collar exemptions under the FLSA, the Court’s analysis will likely shed light on the status of those individuals who perform sales but are uncertain if they qualify for mandatory overtime pay under federal law.

Panera Bread Company has agreed to pay $5 million in order to settle two putative class action lawsuits filed by former restaurant workers who allege that the company failed to pay them overtime and forced them to work without pay during their meal breaks.

According to regulatory filings with the Securities and Exchange Commission (SEC), Panera has allocated funds to be used for the settlement agreement after reaching a deal with the former employees last week. Panera denies any wrongdoing or liability in the lawsuits.

The first of the legal actions was brought by Nick Sotoudeh who filed suit against Panera in California Superior Court in 2009. Sotoudeh claims that Panera refused to pay him overtime, failed to provide meal and rest breaks and further alleged that Panera violated state labor and unfair competition laws. Another former employee, Gabriela Brizuela, was added to Sotoudeh’s amended complaint later that year.

Ms. Brizuela claims that she routinely worked more than 8 hours daily and 40 hours weekly and did not receive appropriate overtime compensation. Additionally, Ms. Brizuela alleges that Panera forced her to work during her meal and rest breaks to which she and other employees are entitled under California state law. Prior to the settlement with Panera, Ms. Brizuela sought to form a class action lawsuit comprised of employees who worked at Panera restaurants in California since 2007.

The second suit addressed by the recent settlement agreement was brought by two former employees against Panera in San Bernadino County Superior court in July 2011 and made similar allegations.

The California Superior Court would have to approve the settlement before it would go into effect, but according to Panera’s filings with the SEC, the company has reserved $5 million for the claims.

California passed a new law authorizing the California Labor and Workforce Development Agency (LWDA) to stiffen penalties for employers that misclassify their employees.

Many employers misclassify their employees as independent contractors in order to cut costs. Employers attempt to save on their Federal Insurance Contributions Act (FICA) costs, unemployment contributions, workers’ compensation insurance costs, and benefit contributions by misclassifying their employees as “independent contractors.” Employers also try to avoid paying “independent contractors” minimum wage, overtime, payroll tax, and paid and unpaid leave.

Under California’s new law, LWDA will fine employers who misclassify $5,000 to $25,000 for each violation. Those companies that repeatedly misclassify employees will be fined from $10,000 to $25,000 for each violation. Additionally, an officer or the owner of the company must post a signed notice, somewhere visible to all employees, stating that the company has violated the law and will effectively change their practices.

The strengthened penalties will further deter negligent and scrupulous employers from cheating employees out of their duly earned wages and benefits.