Washington, D.C. – On August 15, Peter J. Messitte of the United States District Court for the District of Maryland entered judgement for $1,134,886.86 in unpaid wages in favor of The Employment Law Group® clients against Viable Communications, Inc., John Yeh, and Joseph Yeh.  John Yeh is the owner of Viable Communications Inc., and his brother, Joseph Yeh, is the former vice president for corporate strategy.

Last October, the Yeh brothers pleaded guilty in U.S. District Court to engaging in a conspiracy to defraud the Federal Communications Commission’s (FCC) Video Relay Service (VRS) program, allegedly submitting approximately $55 million in fraudulent VRS claims to the FCC.

Beginning in the fall 2007, the Yeh brothers paid individuals to make phony phone calls using Viable’s VRS service and then charged  the FCC $390 per hour for all VRS calls that Viable processed.

VRS is an online video translation service that allows people with hearing disabilities to communicate with individuals through the use of interpreters and Web cameras.  A person with a hearing disability contacts a VRS provider through the Internet using a Web camera.  The VRS provider employs a video interpreter to interpret the hearing disabled person’s signed conversation and then relays the signed conversation orally to a hearing person.

The plaintiff’s attorney Nicholas Woodfield stated:

After hearing the evidence presented by The Employment Law Group law firm, Judge Messite entered summary judgment on the firm’s clients’ claims without even requiring them to go to trial.  Moreover, he held that the president, John Yeh, and his brother, Joseph Yeh, were so responsible for the wages not getting paid that he also held them individually liable and also awarded an equal amount of liquidated damages to the firm’s clients.  It was a tremendous vindication of the employees’ rights to be fairly compensated for their hard work.

The matter of attorney’s fees remains outstanding.  Prevailing employees under the Fair Labor Standards Act are entitled to having their attorney’s fees paid by the defendants.

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Law360 quoted The Employment Law Group attorney Nicholas Woodfield regarding the law firm’s landmark unpaid wages victory in Randolph v. ADT Security Services, Inc. Judge Chasanow from the District Court of Maryland held that ADT violated the Fair Labor Standards Act (FLSA) when it fired two commissioned salespeople because they complained to the Maryland Department of Labor, Licensing, and Regulation (DLLR) that they believed they should be paid for overtime.   The plaintiffs purportedly submitted confidential documents to the DLLR to support their FLSA complaint.

Law360 wrote:

The court… determined that whether or not the plaintiffs’ [submission of confidential documents] were reasonable did not matter in this case because lodging an FLSA complaint is participation rather than opposition, and the Fourth Circuit has refused to apply any reasonableness requirement to participation in employment cases.

“[The decision] very clearly vocalizes that you have an absolute right to go to the DLLR or Department of Labor state agencies and support your claim with whatever documents you want,” said Nicholas Woodfield of The Employment Law Group, who represents the plaintiffs.

Noting that Thompson and Randolph were likely properly classified as exempt from the FLSA’s wage requirements based on the commissioned salesperson exemption, Woodfield told Law360 that the decision was especially important for employees because it clarified that their complaining activities — including providing supporting materials to agencies — are protected even if the underlying wage claim doesn’t pan out.

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In Randolph v. ADT Security Services, Inc., Judge Chasanow from the District Court of Maryland granted The Employment Law Group® clients and former ADT Security employees’ Motion for Summary Judgment as to liability against their former employer.  ADT had terminated two commissioned salespeople because they complained to the Maryland Department of Labor, Licensing, and Regulation (DLLR) that they believed they should be paid for overtime.

In filing their complaint alleging a violation of the Fair Labor Standards Act (FLSA), the ADT employees complied with requests from the DLLR to attach allegedly employer and client confidential information.  ADT argued that the employees were lawfully fired because they were not authorized to disseminate confidential information.  ADT also argued that the employees should not receive protection under the FLSA on the theory that attachments and supporting documents are not part of FLSA complaints.

Noting it would seem contrary to the purposes of the FLSA to punish employees for complying with the instructions they receive from the DLLR, the court granted Summary Judgment in favor of the employees, stating:

Perversely, ADT’s position would result in a situation wherein employees with the most supporting evidence would also face the greatest risk of dismissal. As a result, enforcement agencies would be less able to undertake early assessments of employees’ claims, as employees could not be expected to provide much evidence on their own (for fear of exposing themselves to termination).  Employers would then have to face greater government intrusions into their business while the complaint was investigated; because of the lack of early information, these investigations would likely last longer. Meanwhile, employers would have an incentive to cull through every document attached to an FLSA complaint, looking for any violation of company policy in an effort to forestall expensive litigation.

More problematically, they could simply choose to impair the ability of employees to make claims at all by dubbing all possible supporting documentation “confidential.”  Such a situation would grossly undermine enforcement of the FLSA, which hinges upon “information and complaints received from employees” (citation omitted).  The FLSA antiretaliation is about the free sharing of information and a narrow view of complaint would hamstring that fundamental purpose.

The court held that the common dictionary definition of “complaint” and its use in standard civil litigation “embraces attached supporting documentation.”   The court further ruled that unlike in “opposition” cases (employees oppose wrongdoing) the law controlling “participation” cases (employees participate in an investigation) permits employees to disclose confidential information to investigators even when done unreasonably.

The court concluded:

ADT’s explicit admissions that Plaintiffs lost their jobs because of the filings with the DLLR mandate only one conclusion: ADT retaliated against Plaintiffs because they engaged in a protected activity. Summary judgement must therefore be granted for the Plaintiffs on count one of the complaint on the issue of liability.

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• Kinder Morgan Employees Receive $830,000 in Unpaid Overtime Settlement (unpaidovertimeblog.com)

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Kinder Morgan has agreed to pay roughly $830,000 in unpaid overtime and other back pay to thousands of current and former employees – the result of a U.S. Department of Labor (DOL) investigation into Kinder Morgan business practices that purportedly violate the Fair Labor Standards Act (FLSA).  The lawsuit alleged Kinder Morgan:

• Improperly rounded work hours in Kinder Morgan’s favor;
• Failed to pay employees who attended meetings before their shift began; and
• Used a lower overtime rate by failing to include non-discretionary bonuses in its overtime rate calculation.

The FLSA requires employers to include in the calculation of the overtime rate employee bonuses awarded for meeting productivity, efficiency, or attendance goals.  Secretary of Labor Hilda Solis stated, “Today’s settlement agreement provides back wages, but will also help ensure that Kinder Morgan complies with the law in the future.”

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Attorney Nicholas Woodfield was quoted in a Fiscal Times story titled Stripper ‘Consultant’ Strikes Back against Boss on the misclassification of employees as independent contractors:

“Shortly after the recession started, we started getting calls from people saying, ‘My employer has shifted me to being an independent contractor,’” said Nicholas Woodfield, principal at [T]he Employment Law Group, a Washington, D.C. law firm representing workers. “The employers, whether they’re intending to or not, are fee shifting the expenses of having a workforce onto the employees and the federal, state and local governments.”

The recession has caused many employers to seek new ways to cut costs, and unfortunately some employers have chosen to misclassify employees as independent contractors.   Until the employer is caught, misclassification temporarily saves the employer from

• paying minimum wages,
• paying overtime,
• paying the payroll tax,
• paying worker’s compensation,
• paying unemployment,
• paying social security,
• offering or subsidizing employee health benefits,
• offering paid leave, and
• offering Federal Family and Medical Leave Act (FMLA) unpaid leave.

By misclassifying employees as independent contractors, employers reduce their Federal Insurance Contributions Act (FICA) costs, unemployment contributions, workers’ compensation insurance costs, and benefits contributions.  As the result, misclassified employees from restaurant employees to construction workers to even exotic dancers are wrongly denied access to unemployment insurance, workers’ compensation, and other protections, and taxpayers are deprived of tax dollars.

The federal government and each state have tests used to determine a worker’s status and the IRS may even provide a business with their opinion on the classification of a company’s workers.  These tests often consider factors such as

• how much control he worker has over how and when to perform work,
• whether the worker is economically independent from the company, and
• whether the worker uses his or her own equipment.

Employers caught misclassifying employees are often subject to severe fines and sued for back pay and benefits by the misclassified employees.  Because of the pressure for businesses to cut expenses, undoubtedly employers will unlawfully misclassify, leading to more lawsuits by employees reasserting their workplace rights.

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In Kasten v. Saint-Gobain Performance Plastics Corp., Justice Breyer delivered the opinion of the Court, holding that oral complaints constitute protected conduct under the antiretaliation provision of the Fair Labor Standards Act of 1938 (FLSA).  Kevin Kasten brought this lawsuit against his former employer, Saint-Gobain Performance Plastics Corp., alleging it located its timeclocks between the area where Kasten and other workers donned (and doffed) work-related protective gear and the area where they carry out their assigned tasks.  He further alleges that Saint-Gobain fired him because he orally complained to management about the location of the timeclocks.  The sole question before the court was whether “filed any complaint” also includes oral complaints.  Holding that it does, Justice Breyer wrote:

Filings may more often be made in writing.  See, e.g., Ritter v. United States, 28 F. 2d 265, 267 (CA3 1928) (finding words “file a claim for refund” to require a written request in context of tax code).  But we are interested in the filing of “any complaint.” So even if the word “filed,” considered alone, might suggest a narrow interpretation limited to writings, the phrase “any complaint” suggests a broad interpretation that would include an oral complaint.  See, e.g., Republic of Iraq v. Beaty, 556 U.S. , (2009) (slip op. at 7).  The upshot is that the three-word phrase, taken by itself, cannot answer the interpretive question.

…

Several functional considerations indicate that Congress intended the antiretaliation provision to cover oral, as well as written, “complaint[s].”  First, an interpretation that limited the provision’s coverage to written complaints would undermine the Act’s basic objectives.  The Act seeks to prohibit “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.” 29 U. S. C. §202(a).  It does so in part by setting forth substantive wage, hour, and overtime standards.  It relies for enforcement of these standards, not upon “continuing detailed federal supervision or inspection of payrolls,” but upon “information and complaints received from employees seeking to vindicate rights claimed to have been denied.” Mitchell v. Robert DeMario Jewelry, Inc., 361 U. S. 288, 292 (1960).  And its antiretaliation provision makes this enforcement scheme effective by preventing “fear of economic retaliation” from inducing workers “quietly to accept substandard conditions.” Ibid.

…

Second, given Congress’ delegation of enforcement powers to federal administrative agencies, we also give a degree of weight to their views about the meaning of this enforcement language. . . . The Secretary of Labor has consistently held the view that the words “filed any complaint” cover oral, as well as written, complaints.

The Court held in this 6-2 opinion (with Justices Scalia and Thomas dissenting and Kagan not taking part) that the FLSA prohibits employers from retaliating against employees who make oral, as well as written, complaints to their employer.  Had the Court ruled that only workers filing written complaints were protected, workers would be deterred from using informal methods to address violations of the law by their employer.  Instead, the opinion bolsters the level of protection afforded employees who report workplace violations of the FLSA.

On October 26, 2010, Nicholas Woodfield, Principal at The Employment Law Group® law firm, will lecture on the misclassification of employees as independent contractors at the D.C. Bar CLE entitled “Changing Currents in Employment Law 2010: Recent Trends and Developments.” The CLE will focus on the Fair Labor Standards Act, unpaid wage actions, trends in disability litigation under the recently amended Americans with Disabilities Act, new developments in Family and Medical Leave Act litigation, recent decisions on damages in employment law actions, the latest U.S. Supreme Court employment law decisions, and new whistleblower protection laws.  More information is available from the D.C. Bar here.

At the 11th Circuit’s sua sponte request, the U.S. Department of Labor (DOL) submitted an opinion that undocumented workers are entitled to bring claims for unpaid minimum wages and overtime under the Fair Labor Standards Act (FLSA). While the 11th Circuit’s query is troublesome, given that neither party had raised it before the court, and given that one of the leading circuit court decisions on the issue is from the 11th Circuit, it is heartening to read the DOL’s opinion:

The longstanding position of the [DOL] is that undocumented workers are entitled to minimum wages and overtime pay for hours worked under the FLSA. This Court has unequivocally sustained that position. See Patel v. Quality Inn S., 846 F.2d 700,703-06 (11th Cir. 1988), cert. denied, 489 U.S. 1011 (1989). The Supreme Court’s subsequent decision in Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137 (2002), did not disturb that holding…

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

On July 6, 2010, a three judge panel of the Second Circuit overturned a district court’s finding that pharmaceutical sales representatives fall into the outside sales and administrative employee exemptions to the overtime provisions of the Fair Labor Standards Act.  The opinion narrows the definition of a “sale” and refines what it means to exercise discretion and independent judgment.

According to the Second Circuit, “where the employee promotes a pharmaceutical product to a physician but can transfer to the physician nothing more than free samples and cannot lawfully transfer ownership of any quantity of the drug in exchange for anything of value, cannot lawfully take an order for its purchase, and cannot lawfully even obtain from the physician a binding commitment to prescribe it, we conclude that it is not plainly erroneous to conclude that the employee has not in any sense, within the meaning of the statute or regulations, made a sale.”  In comparison, the district court opined that while the plaintiffs may not “sell” in a technical sense, holding them exempt is within “the Act’s spirit, purpose, and goals.” 

Regarding the administrative exemption, the court noted the absence of any “evidence . . . that the Reps have any authority to formulate, affect, interpret, or implement Novartis’s management policies or its operating practices, or that they are involved in planning Novartis’s long-term or short-term business objectives, or that they carry out major assignments in conducting the operations of Novartis’s business, or that they have any authority to commit Novartis in matters that have significant financial impact.”  The court also discounted the importance of contracts made between the plaintiffs and hotels and convention centers, observing that all contracts are subject to predetermined budgets. 

The court relied heavily upon an amicus curiae brief filed by the Department of Labor in support of the approximately 2,500 plaintiffs in the case.  We blogged about the DOL’s brief here.  The case is In re Novartis Wage and Hour Litigation, and a copy of the court’s opinion is available here.

The employment attorneys at The Employment Law Group® law group have extensive experience recouping unpaid wages and fighting for employees who are misclassified as exempt from overtime.  To learn more about the firm’s Unpaid Wages and Overtime Practice, click here.

Judge Lynn Adelman of the U.S. District Court for the Eastern District of Wisconsin has granted conditional class certification in a suit against Cargill Meats alleging that the company violated the Fair Labor Standards Act.  The suit seeks payment for time spent donning and doffing protective gear by production line employees paid using modified “gang time.”

Last month, Tyson Foods settled a donning and doffing suit for $500,000.  Information on the Tyson Foods settlement is available here.

The employment attorneys at The Employment Law Group® law firm have extensive experience recouping unpaid wages and fighting for employees who are misclassified as exempt from overtime.  To learn more about the firm’s Unpaid Wages and Overtime Practice, click here.