On May 1, 2012, the U.S. Department of Labor announced that Wal-Mart Stores Inc. has agreed to pay $4,828,442 in back wages and damages to over 4,500 employees, and $463,815 in civil penalties, as a result of an investigation by the Labor Department’s Wage and Hour Division.  The investigation found that Wal-Mart violated overtime provisions of the Fair Labor Standards Act (FLSA) by failing to compensate vision center managers and asset protection coordinators for their overtime work at Wal-Mart Discount Stores, Supercenters, Neighborhood Markets and Sam’s Club.

In addition, the Labor Department found that Wal-Mart misclassified certain employees as exempt from FLSA’s overtime requirements, even though the employees were entitled to overtime pay for any hours worked above 40 in one week.  Wal-Mart agreed to pay all back wages and liquidated damages to the misclassified employees, plus a penalty to the Department.  Wal-Mart corrected its classification practices in 2007 and spent 5 years negotiating the back pay issues before agreeing to the terms of the settlement.

“Thanks to this resolution, thousands of employees will see money put back into their pockets that should have been there all along. The damages and penalties assessed in this case should put other employers on notice that they cannot avoid their obligations to their employees by inappropriately classifying their workers as exempt,” said Nancy J. Leppink, deputy administrator of the Wage and Hour Division.

The Employment Law Group® law firm has an extensive nationwide wage and hour practice representing employees whose rights have been violated, including nonpayment of wages and denial of overtime pay.

Boston Market Corp., a food chain based in Golden, Colorado, agreed to pay $3 million to settle a class action Fair Labor Standards Act (FLSA) lawsuit. According to the suit, Boston Market misclassified their assistant general managers, hospitality managers, and culinary managers as exempt from overtime pay.  Because of the misclassification, Boston Market failed to pay the restaurant managers working in New York and Connecticut for hours worked over 40 hours a week.

The suit was filed in 2010 after the restaurant managers were asked to perform mundane tasks such as cleaning ovens, mopping floors, and serving food but were not properly paid for their overtime work. The workers involved in the class action lawsuit will each receive up to $12,000 in compensatory damages.

The Employment Law Group® law firm has an extensive nationwide wage and hour practice representing employees whose rights have been violated, including nonpayment of wages and denial of overtime pay.

A class of sales representative this month filed a $70 million suit against Novartis Pharmaceuticals Corp., a subsidiary of Danish pharmaceutical giant Novo Nordisk, Inc., in the U.S. District Court for the Southern District of New York.

The sales representatives allege that Nordisk violated the Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL) by failing to pay overtime to the class, which is comprised of possibly 2,000 people. McKenzie Stepe and Karen Woolen, the lead plaintiffs, claim that they regularly worked over 40 hours per week and did not receive overtime compensation.

Steven L. Wittels, the plaintiffs’ attorney, said:

“[Novartis] misclassified its sales representatives as salaried employees exempt from the benefits of federal and state overtime laws, when in fact, they are not exempt at all. There is something rotten about a company that earned more than $3 billion in 2011 profits, and at the same time refuses to pay its employees the overtime pay that is their due.”

The Employment Law Group® law firm has an extensive nationwide wage and hour practice representing employees whose rights have been violated, including nonpayment of wages and denial of overtime pay.

Last week, Home Depot USA Inc. agreed to pay $1.6 million to settle a class action lawsuit alleging that the company failed to compensate employees for their vacation pay after terminating them.

According to the motion filed in the U.S. District Court for the Central District of California seeking preliminary  approval of the settlement, the former workers are to receive compensation for the unpaid vacation time, “as well as additional payment for interest and waiting time penalties.” The plaintiff class includes more than 1300 former Home Depot employees terminated since August 2006.

The lawsuit was lodged as a proposed class action in August 2010 in California Superior Court and was removed to federal court in September 2010. The former workers alleged that Home Depot maintained a policy according to which employees were allowed to carryover an unlimited amount of vacation time from year-to-year and, upon separation from the company, Home Depot would then pay employees all accrued vacation time. The plaintiffs, however, allege that Home Depot often failed to fully compensate employees for their accrued vacation time.

For example, two of the lawsuit’s named plaintiffs – Martin Henshaw and Vern Souza – alleged that Home Depot only paid them a fraction of their accrued vacation hours upon their termination from employments, with Mr. Henshaw claiming that the company only paid him 35% of an accumulated 528 hours’ vacation, and Mr. Souza claiming he only received 45% of an accumulated 1210 hours’ vacation pay.

Despite agreeing to settle the lawsuit for $1.6 million – an amount reached after mediation between the parties last year – Home Depot denies all claims of liability or wrongdoing.

The Employment Law Group® law firm has an extensive nationwide wage and hour practice representing employees whose rights have been violated, including nonpayment of wages and denial of overtime pay.

On February 23, 2012, E-Trade Financial Corp. agreed to pay a $1.5 million settlement to resolve claims by a proposed class of company relationship managers who accused E-Trade of violating the Fair Labor Standards Act by refusing to pay them overtime.

The plaintiffs filed a motion in the U.S. District Court for the Southern District of New York seeking preliminary approval of class settlement, in which the settlement funds would be awarded to two subclasses of employees: those employed by E-Trade relationship as managers in California between 2008 and 2011 and similarly situated employees in New York between 2006 and 2011.

The lawsuit began in May 2011 when Hector Palacio, an E-Trade relationship manager, filed suit claiming that the brokerage company misclassified him as exempt from FLSA’s overtime protection and failed to pay him overtime ages despite the fact that he routinely worked more than 40 hours per week.  The complaint was amended several months later, with Palacio naming three additional plaintiffs and seeking claims on behalf of current and former E-Trade relationship managers. The plaintiffs alleged that E-Trade violated FLSA by failing to keep adequate payroll and time records for employees and classified the employees as ‘relationship managers’ instead of ‘relationship sales associates’ in an effort to classify the employees as exempt.

According to the plaintiff’s amended complaint, “E-Trade did not perform a person-by-person analysis of relationship managers’ job duties in making its decision to classify all [of them] as exempt” and “intentionally, willfully and repeatedly engaged in a pattern of violating the FLSA.”

The Employment Law Group® law firm has an extensive nationwide wage and hour practice representing employees whose rights have been violated, including nonpayment of wages and denial of overtime pay.

On January 25, 2012, U.S. District Judge Paul Crotty issued a preliminary approval of a $99 million settlement agreement between Novartis Pharmaceuticals Corp. and a class of more than 7,000 pharmaceutical sales representatives who allege that the company misclassified them as exempt from overtime pay.

Final approval of the settlement deal awaits the U.S. Supreme Court’s determination of the overtime status of the drug sales representatives involved in another suit.  Final approval of the settlement would resolve the wage-and-hour claims that the sales representatives initially brought in 2006, in addition to later claims pertaining to a more recent period.  The final approval hearing is slated to take place on May 31, 2012.

Pharmaceutical companies have often classified drug sales representatives as being exempt from the overtime protections of the Fair Labor Standards Act (FLSA); however, in recent years many FLSA cases have challenged this policy.

In the present case, In Re: Novartis Wage and Hour Litigation, the U.S. Court of Appeals for the Second Circuit held in July 2010 that the Novartis sales representatives were entitled to receive overtime pay.  The Court relied on an amicus brief filed by the Department of Labor (DOL) that urged the Court to interpret FLSA regulations in a manner that would find sales representatives not exempt from overtime protection.

Last February the Ninth Circuit ruled in a similar class action lawsuit against GlaxoSmithKline that sales representatives are considered ‘outside sales employees’ under FLSA and are therefore exempt from overtime benefits.

The Supreme Court denied Novartis’ petition for certiorari but agreed to review the GlaxoSmithKline decision. The Supreme Court’s decision on whether drug sales representatives are covered by federal overtime protections is expected later this year.

The Employment Law Group® law firm has an extensive nationwide wage and hour practice representing employees whose rights under the Fair Labor Standards Act (FLSA) have been violated.

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.

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.

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.

On September 26, 2011, the Second Circuit Court of Appeals held that both a Fair Labor Standards Act (FLSA) collective action and a state class action can be part of the same lawsuit. As a result, the Second Circuit has joined the Seventh, Ninth and District of Columbia Circuits in allowing supplemental jurisdiction of federal/state hybrid wage claims.

Shahriar, et al. v. Smith & Wollensky Restaurant Group, Inc. involved a group of waiters working at a restaurant in Manhattan. They filed a complaint against their employer for violating federal FLSA minimum wage and overtime provisions and various state law provisions of the New York Labor Law (NYLL).

The plaintiffs alleged that the restaurant required the waiters to share their tips with employees that did not interact with customers and would otherwise be tip-ineligible. In doing this the restaurant violate the tip-credit provisions of the FLSA.  Similarly, the NYLL prohibits requiring tipped employees from sharing their tips with non-service employees and managers. The waiters also alleged that the restaurant violated the NYLL by “failing to pay waiters for an extra hour’s work when their workdays lasted more than ten hours.”

According to court documents:

FLSA and NYLL claims usually revolve around the same set of facts, plaintiffs frequently bring both types of claims together in a single action using the procedural mechanisms available under 29 U.S.C. § 216(b) to pursue the FLSA claims as a collective action and under Rule 23 to pursue the NYLL claims as a class action under the district court’s supplemental jurisdiction

Under FLSA members must affirmatively opt-into the federal representative action lawsuit. But, under state law members of the state law class action must affirmatively opt-out of the class.  However, the restaurant argued that the number of employees in the state law opt-out class would be inherently larger than the number of employees in the FLSA opt-in representative action and that it would lead to “inherent conflict.”  The court ultimately held that:

1. The fact that there are more class members in the state law class action than those in the FLSA collective action “should not lead a court to the conclusion that a state claim ‘substantially predominates’ over the FLSA action”
2. Noting in the language of the FLSA prevents the exercise of supplemental jurisdiction over Plaintiffs’ state law wage claims
3. FLSA’s “saving clause” makes clear that states may enact laws that are more protective than those that are provided in the act
4. The legislative history surrounding the FLSA’s opt-in provision also provides no support for precluding joint prosecution of FLSA and state law wage claims in the same federal action
5. Finally… the Seventh, Ninth, and District of Columbia Circuits all have determined that supplemental jurisdiction is appropriate over state labor law class claims in an action where the court has federal question jurisdiction over FLSA claims in a collective action

As such the Second Circuit joined the growing list of jurisdictions that have approved of hybrid wages actions as a means of securing unpaid compensation.