On January 24, 2012, Judge Ernest Hiroshige of the Los Angeles Superior Court issued a tentative approval of a $5 million settlement agreement between Staples Inc. and a class of employees who allege that the office supply chain failed to pay them for floating holidays and vacations.

A former Staples employee, Vikki Park, filed the class action lawsuit in November 2010, claiming that Staples violated California laws which mandate that employers pay employees for their unused accrued vacation hours. The lawsuit alleges that Staples’ policy of requiring part-time workers to be actively employed on their employment anniversary dates in order to receive their annual vacation pay constitutes, in effect, “an illegal forfeiture”.

The settlement agreement provides awards to three classes of employees:  those who were denied vacation pay since July 2008, those who did not receive wages upon termination since November 2008, and those who were denied floating holiday pay since November 2006.

The $5 million settlement also resolves two other similar lawsuits brought by employees of Staples stores in California.

The Employment Law Group® law firm has an extensive nationwide wage and hour practice representing employees whose rights have been violated.

On January 20, 2012, Starbucks Corporation agreed that it owes roughly $7.5 million to baristas in Massachusetts for allowing shift supervisors to share in employee tip pools since March 2005. The class action lawsuit was brought on behalf of 11,000 Starbucks baristas throughout Massachusetts.  The settlement was reached one day before the scheduled trial. The plaintiffs initially sought over $20 million in damages.

In March 2011, Judge Nathaniel M. Gordon for the U.S. District Court for the District of Massachusetts certified a class of the Massachusetts baristas who had worked for Starbucks during the past six years.  The court also ruled that Starbucks’ tip policy violated state law.

In June 2011, the US. Court of Appeals for the First Circuit refused to review the ruling of the district court. The class action dispute continued through the summer and fall of 2011, as Starbucks argued that the state tip law was unfair and deprived supervisors of their pay. In response, the plaintiffs argued that Starbucks could have raised its supervisors’ wages by $2 an hour.   

The damages award will be divided into two time periods. The judge decided not to treble damages for the period prior to July 11, 2008, but did treble the damages for the period after July 11, 2008, as required in an amendment to the Massachusetts tip sharing statute.

The Employment Law Group® law firm has an extensive nationwide wage and hour practice representing employees whose rights have been violated.

On December 14, 2011, Lady Gaga’s former personal assistant, Jennifer O’Neill, filed a lawsuit against Lady Gaga’s Mermaid Touring Company seeking nearly $380,000 for alleged unpaid overtime. The 41-year-old O’Neill worked for Lady Gaga for 13 months during Gaga’s 2010 Monster Ball world tour.  O’Neill claims that she worked 7,168 unpaid hours.

The Fair Labor Standards Act (FLSA) mandates that non-exempt employees receive minimum wage and overtime pay. O’Neill claims that although she was a salaried employee, she was misclassified as exempt from FLSA protections.

O’Neill filed the lawsuit in the U.S. District Court for the Southern District of New York.  She alleged that Gaga expected her to be on call at any time of the day or night, which often interfered with O’Neill’s ability to sleep and eat meals. In addition, O’Neill was responsible for “ensuring the promptness of a towel following a shower and serving as a personal alarm clock to keep [Gaga] on schedule” and was not compensated beyond her salary of $75,000 a year. A spokeswoman for Gaga said that the lawsuit is “completely without merit.”

The Employment Law Group^® law firm has an extensive employment practice and represents employees nationally who have been victims of nonpayment.

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.

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.

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.

Four U.S. Open umpires filed a putative class action lawsuit in the U.S. District Court for the Southern District of New York, alleging the U.S. Tennis Association (USTA) misclassifies them as independent contractors instead of employees and failing to pay them overtime.  The USTA pays umpires roughly between $115 and $200 a day without regard for the number of hours worked each day, which often exceeds 8 hours.

The case is Meyer v. U.S. Tennis Association, Case No: 11-CIV-6268.

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In its latest budget request, the U.S. Department of Labor (DOL) requested $46 million in to fight worker misclassification.  The funds will be used to increase enforcement of wage and hour and other labor violations.

Some employers intentionally misclassify their employees as independent contractors, attempting to avoid the following costs:

• 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
• other employee benefits.

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 are wrongly denied access to unemployment insurance, workers’ compensation, and other protections, and taxpayers are deprived of millions of dollars in funds to support government programs.

The DOL believes that increased enforcement will help deter employers from evading their duty to provide their employees with fair compensation and benefits.

Related articles

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

According to MarketWatch, the minimum wage is rising in the following seven states:

• Arizona – 10 cents to $7.35
• Colorado – 12 cents to $7.36
• Montana – 10 cents to $7.35
• Ohio – 10 cents to $7.40
• Oregon – 10 cents to $8.50
• Vermont – 9 cents to $8.15
• Washington – 12 cents to $8.67

17 states and Washington, D.C. will have minimum wages higher than the national minimum wage.  Generally, employers are prohibited from paying their nonexempt employees less than the national minimum wage under the Fair Labor Standards Act (FLSA) or less than the minimum wage of their state under their state’s labor laws.  For more information about the FLSA and state labor laws, click here.

On July 26, 2010, the U.S. District Court for the Northern District of Illinois granted restaurant workers’ motion that allows them to pursue a class action lawsuit against their employer, The Smith & Wollensky Restaurant Group Inc.  The restaurant workers allege that Smith & Wollensky, which owns the steakhouse chain with the same name, violated the Fair Labor Standards Act (FLSA) and Illinois wage law by illegally requiring workers to pool tips with nontipped employees and by failing to pay them required overtime and minimum wages.  Click here for the court’s full opinion.

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.