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.

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.