Last week, in a Fair Labor Standards Act (“FLSA”) case, a federal judge denied summary judgment to a pharmaceutical company after finding that the former sales representatives were non-exempt employees entitled to overtime payment.  In the complaint, the employees alleged that their employer, Schering Corporation (“Schering”) misclassified them as “exempt” employees and as a result, failed to pay them overtime wages in violation of the FLSA.  In response to the allegations, Schering argued that the former employees were pharmaceutical sales representatives and thus, fell within the FLSA’s outside sales exemption.  The district court rejected Schering’s argument, finding that the pharmaceutical sales representatives did not fit within the outside sales exemption because they did not “make sales or obtain contracts or orders,” as required under the regulations.  Moreover, the court noted that the sales representatives did not have the capacity to carry out sales with the physicians that they visited because their employer prohibited them from entering into contracts with physicians for the prescription or purchase of their employer’s product.  Relying on the plain meaning of the statutory and regulatory texts that define the FLSA’s outside sales exemption, the court concluded that the employees did not “sell” or make a “sale” under the FLSA and must receive time-and-a-half for all hours worked in excess of 40 hours a week.

The takeaway from this case is that the standard for determining whether an employee falls within the “outside sales” exemption is not whether the term “sales” is included in her title, but rather whether the employee actually sells something within the scope of her duties. 

The order and opinion in Kuzinski et al, v. Schering Corp., No. 3:07cv233 (D. Conn. March 30, 2009) is available here.  For information on The Employment Law Group® law firm’s Wage and Hour Practice, click here.

A security guard has filed a complaint in the U.S. District Court for the Southern District of Florida against Wackenhut Corporation (“Wackenhut”) for violations of the Fair Labor Standards Act (“FLSA”).  In the complaint, the former employee alleges that the company violated the wage requirements of the FLSA when it paid him and other similarly-situated employees overtime based on “arbitrary lower, and incorrect, hourly wages,”  instead of the time-and-a-half compensation required by law.  Additionally, the complaint alleges that Wackenhut acted “willfully, intentionally and in reckless disregard of the rights of [the employees],” because it refused to pay the security guards the correct overtime payment despite notice and demand on same.  This is not the first time that Wackenhut has been sued for violations of the FLSA.  In October of 2008, a similar class action was filed against Wackenhut in Kansas, alleging that the company violated the overtime provisions of the FLSA by refusing to compensate its security officers with the statutory minimum rates for regular and overtime hours worked.  Under the FLSA, non-exempt employees are entitled to time-and-a-half for all hours worked in excess of 40 hours per week.  Accordingly, employers who fail to compensate their employees according to the regulations of the FLSA, may be liable for unpaid wages, unpaid overtime, liquidated damages, and attorneys’ fees.  For more information about the FLSA and The Employment Law Group® law firm’s Wage and Hour Practice, click here.

In a wage and hour class action suit, attorneys representing more than 500 employees asked a New York district court to grant final approval of a $2.5 million dollar settlement that was preliminarily approved in October of 2008.  In the complaint, two former servers alleged that their employer, Nobu restaurant, violated the Fair Labor Standards Act (FLSA) by refusing to pay its hourly employees the required minimum wage and by failing to pay overtime.  The complaint also alleged that the restaurant’s servers were improperly forced to share tips with management and other non-tipped employees in violation of state laws.   According to the terms of the settlement agreement, each member of the class action suit will receive approximately $3,300.  For more information about the FLSA and The Employment Law Group® law firm’s Wage and Hour Practice, click here.

In a Fair Labor Standards Act (“FLSA”) collective action against Applebee’s, the U.S. District Court for the Western District of Missouri denied Applebee’s motion to compel interrogatories which required each of nearly 5,600 opt-in employees to account for all duties performed at work since May 2005.  In reaching its decision, the court held that the interrogatories were unduly burdensome and that Applebee’s failed to meet the necessary threshold requirements to compel discovery.   This decision is significant because it reminds employers that they should not rely on the discovery process to determine employees’ work hours, but instead should satisfy their duty under the law which is to create and maintain accurate time records for each employee. 

To learn more about the FLSA and The Employment Law Group® law firm’s Wage and Hour practice, click here.

In Sandoz v. Cingular Wireless, the Fifth Circuit held that if an employee files a timely motion for certification of a collective action under the Fair Labor Standards Act (“FLSA”) that motion relates back to the date the employee filed the initial complaint and prevents an employer from mooting an attempted FLSA collective action by paying the representative employee in full.  This ruling is significant because it demonstrates that while an offer of judgment can moot a FLSA collective action, the relation back principle prevents employers from using Rule 68 as a tool to “pick off” representative employees and avoid ever having to face collective actions.  Thus, finding that the mootness of Ms. Sandoz’s FLSA claim rests on whether she timely filed a motion to certify her collective action, the Fifth Circuit remanded the case to the district court for a consideration of the timeliness and, if necessary, the merits of Ms. Sandoz’s motion to certify. 

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

Hewitt Associates, LLC (“Hewitt”) has agreed to pay $4.9 million to settle a class action suit for alleged violations of wage and hour laws.  The complaint alleged that Hewitt refused to pay hourly employees overtime wages for hours worked in excess of eight hours per day and/or forty hours per week.  The settlement agreement that was conditionally approved on December 8, 2008, resolves a number of pending actions in federal and state courts including: California, Connecticut, Illinois, New Jersey, New York, Pennsylvania, and Wisconsin.  A hearing on final settlement approval is scheduled at 3:00 pm on March 19, 2009.  

The Employment Law Group® law firm routinely represents employees in wage and hour class action suits.  For information about The Employment Law Group® law firm’s Wage and Hour Practice, click here.

Wal-Mart has agreed to pay $54.25 million after seven years of litigation to resolve a class action suit for alleged violations of wage and hour laws.  The complaint alleged that Wal-Mart required its hourly employees to work “off the clock” without pay and that it failed to maintain accurate time records.  The settlement, which remains subject to state court approval, covers over 100,000 former and current hourly employees who worked at Wal-Mart and Sam’s Club stores in Minnesota between September 1998 and January 2004.  The settlement also requires Wal-Mart to utilize various measures including surveys, to ensure that the company remains compliant with state and federal wage and hour laws.

For more information on wage and hour laws, visit The Employment Law Group® law firm’s Wage and Hour Practice at http://www.employmentlawgroup.net/PracticeAreas/Non-Payment-of-Wages.asp .

In a recently released opinion letter, the Department of Labor (“DOL”) states that teachers at daycare centers are not exempt from the minimum wage and overtime provisions of the Fair Labor Standards Act (“FLSA”) because they do not teach in a qualifying institution.  According to the opinion letter, unless a daycare facility is licensed by the State Department of Education and provides introductory programs in kindergarten, grade school curriculums, or nursery school programs in elementary education, its employees will not qualify for the FLSA exemption.  For more information on FLSA exemptions, go to The Employment Law Group® law firm’s Wage and Hour Practice at www.employmentlawgroup.net/PracticeAreas/Non-Payment-of-Wages.asp.

In Ke v. Saigon Grill, Inc., a New York district court judge awarded $4.6 million in back wages and liquidated damages to 36 Chinese immigrant deliverymen for violations of federal and state minimum wage and overtime laws.  In reaching its decision, the district court found that the defendants violated the plaintiffs’ rights under the Fair Labor Standards Act (“FLSA”) and the New York Labor Law by:

• making illegal pay deductions;
• refusing to pay plaintiffs the minimum wage;
• withholding overtime pay from plaintiffs for workweeks as long as 84 hours; and
• creating a false record of payments. 

The district court also found the defendants liable for FLSA retaliation because they terminated plaintiffs after learning of their intention to pursue FLSA claims.  For more information on federal wage and hour laws, click here.

The Fifth Circuit recently held in Hopkins v. Cornerstone America that so-called “sales leaders” were still employees of Cornerstone America rather than independent contractors and therefore were entitled to overtime pay under the Fair Labor Standards Act (“FLSA”).  In affirming the district court’s decision, the Fifth Circuit concluded that the former employees could not reasonably be considered “separate economic entities” because Cornerstone controlled the meaningful economic aspects of their business.  In particular, Cornerstone: decided on the type and price of insurance products that the sales leaders could sell; controlled the number of leads that each sale leader received; and determined the geographic territories where the sales leaders could operate without the plaintiffs’ input.