Unpaid Overtime Blog

Staples Agrees to $42 Million Settlement for Unpaid Overtime

admin — Mon, 01 Feb 2010 16:50:49 +0000

Staples has agreed to a $42 million settlement to resolve 12 wage-and-hour class action lawsuits related to its misclassification of assistant store managers. The settlement comes after several years of litigation, and the claims of unpaid overtime go back to 2002. The settlement includes an agreement that Staples will not appeal a February 2009 jury decision awarding $4.9 million to 343 Sales Mangers. It also resolves a pending case in Massachusetts state court, as well as 10 other cases previously centralized in the District of New Jersey under by the United States Judicial Panel on Multidistrict Litigation. The settlement is subject to court approval.

For information on The Employment Law Group® law firm’s Non-Payment of Wages Practice, click here.

UPS Settles Overtime Suit for $12.8 Million

admin — Tue, 15 Dec 2009 21:40:56 +0000

Late last week a class action suit brought by UPS delivery drivers against their employer was settled for $12.8 million. The suit alleges that the drivers were misclassified as independent contractors and wrongfully denied benefits and overtime as a result. At least 83% of the $12.8 million is to go to the approximately 660 employees. The plaintiffs are expected to request about $2.02 million in costs and fees. A copy of the complaint is available here.

For information on The Employment Law Group® law firm’s Unpaid Overtime Practice, click here.

J.P. Morgan Chase Loan Underwriter Entitled to Overtime According to 2nd Circuit

admin — Wed, 02 Dec 2009 15:00:50 +0000

On November 20, 2009, the 2nd Circuit Court of Appeals held that a loan underwriter at J.P. Morgan Chase was not exempt from the overtime provisions of the Fair Labor Standards Act (FLSA). In Whalen v. J.P. Morgan Chase & Co., the employer claimed that loan underwriters perform work directly related to management policies or business operations and regularly exercise discretion and independent judgment, in accordance with 29 C.F.R. § 541.2(a). However, the Second Circuit looked to 29 C.F.R. § 541.205(a), which distinguishes exempt administrative work from nonexempt production work, and key to its holding was that Whalen was given a detailed set of manuals and guidelines that he was to use to evaluate and approve or decline loan applications. As such he wasn’t exercising the requisite discretion and independent judgment that are the hallmarks of an exempt position. Rather, the Whalen Court determined that Whalen was more involved in the production of loans and therefore was primarily involved with the day-to-day carrying out of the business rather than ‘the running of [the] business [itself]’ or determining its overall course or policies. As such the employer had improperly classified him as exempt under the FLSA because Whalen was, in fact, not employed in a bona fide administrative capacity.

For information on The Employment Law Group® law firm’s Non Payment of Wages Practice, click here.

2nd Circuit Narrowly Interprets the Professional Exemption to Overtime Provisions of the FLSA

admin — Mon, 16 Nov 2009 15:17:13 +0000

On November 12, 2009, the 2nd Circuit Court of Appeals affirmed a lower court decision granting summary judgment in favor of an employee. The case was Young v. Cooper Cameron Corp.. Young alleged that his employer willfully misclassified him as exempt from the overtime provisions of the Fair Labor Standards Act (FLSA), and he also claimed that it hired him into an exempt position while giving him the work of a non-exempt employee.

Young originally applied as a Mechanical Designer, a non-exempt hourly position that requires experience but no college degree. The employer hired him for a position that paid $62,000 annually and required 12 years of engineering-type experience but no college degree. According to the employer, the salaried position fell under the “professional” exemption to the FLSA.

In defense to the claim that the violation was willful, the employer cited research it performed prior to classifying the position as exempt. However, the court found that classification of Young himself and not the position was what mattered. Hiring Young into an exempt position to perform non-exempt work undermined their argument.

Additionally, the Court found that while the nature of the position was technical and required experience, the intention of the law was to focus on highly educated professionals. According to the Court, “[t]he typical symbol of the professional training and the best prima facie evidence of its possession is, of course, the appropriate academic degree, and in these professions an advanced academic degree is a standard (if not universal) prerequisite.” It concluded that “[i]f a job does not require knowledge customarily acquired by an advanced educational degree… then, regardless of the duties performed, the employee is not an exempt professional under the FLSA”

For information on The Employment Law Group® law firm’s Unpaid Overtime Practice, click here.

IBM Agrees to Settle Unpaid Overtime Class Action for $7.5 Mil.

admin — Thu, 22 Oct 2009 13:39:01 +0000

The settlement was reached in a putative class action suit originally filed on April 17, 2008. The suit, Danieli et al. v. IBM Corp., alleged that IBM misclassified thousands of employees as exempt from the Fair Labor Standard Act’s (“FLSA”) overtime pay requirements. The plaintiffs claim that as a result of this misclassification, they were underpaid and failed to receive credit for overtime compensation for their retirement plan as required by the Employee Retirement Income Security Act. The settlement provides $7.5 million including up to $2.5 million going towards attorney’s fees and $150,000 for litigation expenses. The settlement also stipulated that employees in California will receive a higher share due to the stronger claims made under California state law.

According to the settlement agreement, the motivation for the settlement on both sides included the uncertainty in the duration of future litigation as well as amount recovered. Excess costs predicted and accounted for but not spent as well as un-cashed settlement checks will be donated to the Habitat for Humanity.

A copy the Settlement is available here. For information on The Employment Law Group® law firm’s Overtime Practice, click here.

Department of Labor Files Amicus Brief in Support of Drug Reps

admin — Tue, 20 Oct 2009 14:36:45 +0000

On Wednesday, October 14, 2009, the Secretary of Labor submitted an amicus curiae brief supporting the position of over 2,500 pharmaceutical sales representatives seeking payment for overtime. The brief claims that the U.S. District Court for the Southern District of New York erred when it found that Novartis Pharmaceutical sales representatives are exempt from the overtime provisions of the Fair Labor Standards Act (“FLSA”).

At issue is whether the sales representatives were exempt under either the “outside sales” or “administrative” exemptions. While pharmaceutical sales representatives engage in a number of activities similar to an “outside salesman,” no actual sales take place. In fact, such sales are prohibited by federal law. The sales actually take place between the pharmacy and Novartis. According to the Department of Labor, the exemption in the FLSA requires the employee to actually make sales. Since no sales are made, the representatives do not meet the qualifications for the “outside sales” exemption.

Regarding the claim that the representatives satisfy the “administrative” exemption, the Department of Labor states that the representatives are not permitted to “exercise discretion and independent judgment with respect to matters of significance,” as required by the exemption. The representatives are told who to call, given calling goals, and are required to use company scripts, manuals, brochures, and other materials. If a physician asks a question not covered by the materials, the representative must either dodge the question by referring back to the provided materials or direct the physician to the company’s medical experts.

The import of the Second Circuit’s decision will be significant, as if the Department of Labor’s position is accepted the result should be a reclassification of a large number of pharmaceutical sales representatives across the industry. It would also mean that the effected employees should promptly seek legal counsel to determine what unpaid overtime they might be entitled to receive.

For information on the Fair Labor Standards Act and The Employment Law Group® law firm’s Overtime Practice, click here.

Supreme Court Declines Review of $35.6 Million Verdict Against Family Dollar for Unpaid Overtime

admin — Thu, 08 Oct 2009 17:38:53 +0000

This week the Supreme Court denied writ of certiorari in Morgan v. Family Dollar Stores, Inc., thereby allowing the 2006 jury verdict in favor of 1,424 store managers for unpaid overtime to stand. Among the issues raised on appeal was whether store managers were correctly classified as exempt employees under the Fair Labor Standards Act (FLSA). The plaintiffs, current and former store managers, alleged that Family Dollar failed to pay its store managers overtime in violation of the FLSA. Family Dollar claimed that as store managers, the employees were exempt from overtime pay. The Eleventh Circuit affirmed the district court’s finding that the store managers were misclassified as exempt since they spent 80-90% of their time performing non-managerial tasks such as stocking shelves, running cash registers, unloading trucks, and performing janitorial duties. The store managers were managers in title only and therefore not exempt from overtime wages prescribed under the FLSA.

The Eleventh Circuit also held that the district court was within its discretion in denying Family Dollar’s motions to decertify the plaintiffs’ class action status because the court carefully followed the two-stage process for evaluating a collective action and found that the evidence demonstrated that the 1,424 managers in the class were similarly situated in at least 14 key areas.

That the Supreme Court denied review is important to potential plaintiffs in unpaid overtime class action suits. It lets stand the important lenient standard for initial certifications of class action status and ensures that employers cannot take advantage of employees by granting them a greater title than their position deserves. This protects employees from being deprived of the important rights granted to them under the FLSA.

For more information on the FLSA and The Employment Law Group® law firm’s Overtime Practice, click here.

Workplace Fraud Act of 2009 Will Go Into Effect on October 1, 2009

admin — Tue, 22 Sep 2009 18:53:43 +0000

Maryland’s Workplace Fraud Act of 2009 will go into effect on October 1, 2009. Under the new law, employers in the landscaping and construction industries that knowingly misclassify employees may be subject to a civil penalty of up to $5,000 per misclassified employee. An employer that misclassifies an employee three or more times can be assessed an administrative penalty of up to $20,000 for each misclassified employee. Additionally, employers who fail to produce requested records may be subject to a fine of up to $500 per day for each day the records are not produced. Although the Act is limited to the landscaping and construction industries, employees in other industries can still seek damages for improper classification under the Fair Labor Standards Act.

Study Reveals That Low-Wage Employees Are Often Victims of Wage Violations

admin — Thu, 03 Sep 2009 17:16:58 +0000

A recent study reveals that low-wage employees are routinely denied overtime pay, paid less than the minimum wage, forced to work-off-the clock without pay, and have their meal breaks denied, interrupted or shortened. The study, which was based on a survey of employees in Chicago, Los Angeles, and New York City, demonstrates that employers continue to ignore and violate the current framework of employee protections under the Fair Labor Standards Act (FLSA). According to the study, more than two-thirds of the employees interviewed have experienced at least one wage and hour violation in the previous work week. The study also found that among employees who worked more than 40 hours in their previous work week, more than 75 percent were not paid the mandated overtime rate by their employers. Other findings include:

FLSA violations are more prevalent in certain industries such as apparel and textile manufacturing, personal and repair services, and in private households;
African-Americans are three times more likely to experience an FLSA violation than white employees; and
Employees employed by companies with less than 100 employees are more likely to experience FLSA violations than those employed by larger companies.

In sum, the FLSA is routinely violated by employers in the low-wage labor market. For more information on the FLSA and The Employment Law Group® law firm’s Wage and Hour Practice, click here.

Sixth Circuit Lessens Burden for Employees in FLSA Collective Actions

admin — Fri, 21 Aug 2009 02:51:54 +0000

The Sixth Circuit has issued a significant decision in O’Brien et al. v. Ed Donnelly Enter., resolving several key issues on class certification under the FLSA. The case was initiated by two employees who alleged that their employer violated the FLSA by requiring employees to work “off the clock” and by altering employees’ payroll reports to reflect fewer hours than what the employees had actually worked. The district court initially certified the class of plaintiffs but later decertified the class on the grounds that the opt-in plaintiffs were not “similarly situated” to the lead plaintiff because individualized questions predominated. Finding that the district court “implicitly and improperly applied a Rule-23 type analysis… a more stringent standard than is statutorily required [for FLSA class certification],” the Sixth Circuit found that the employees were similarly situated because the named employees demonstrated that all employees “suffer[ed] from a single, FLSA-violating policy.” In reaching this result, the Sixth Circuit also clarified that when common theories of liability do not exist among all employees, partial decertification and not a denial of certification may be more appropriate. This is a substantial relaxation of the heightened standards previously employed and thus, greatly increases the chance that employees’ FLSA claims will be certified for collective action.

The Sixth Circuit also established the following standards:

Employees’ refusal of an offer of judgment should not result in the dismissal of employees’ claims. If an employer offers to satisfy the employee’s demand and the employee refuses the offer, the employee’s claim is moot. However, a district court should not dismiss the employee’s claim outright. Instead, the court should enter judgment in favor of the employee for the amount offered by the employer.
Courts can impose sanctions on an employer for spoliation of evidence even if the requested records were destroyed prior to the initiation of litigation. The Court clarified that sanctions can be appropriate for the destruction of evidence, even when records are destroyed prior to the initiation of litigation, where an employer “should have known that the evidence may be relevant to future litigation.”
Reaffirming the employee-friendly burden of proof for FLSA plaintiffs. The Court reiterated the principal that an FLSA plaintiff must prove by a “preponderance of the evidence that he or she ‘performed work for which he [or she] was not properly compensated.” In doing so, the Court reaffirmed the rule that “the [employee’s] burden of proof is relaxed” when an employer maintains inaccurate or inadequate records, and that upon satisfaction of that relaxed burden, the burden shifts to the employer to negate the employee’s inferential damage estimate.

For information on The Employment Law Group® law firm’s Wage and Hour Practice, click here.