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Misclassifying employees as exempt from overtime requirements is bad enough on its own, but the damage done can be compounded when the inaccurate status prevents employees from bringing their grievances against their employer to a court of law.

That’s what happens when employees are forced to sign arbitration agreements, which have become increasingly common throughout all American industries. Having started out as a way for businesses to resolve disputes between each other, companies have increasingly been expanding their interpretation of the Federal Arbitration Act to include relationships between businesses and individuals, such as their employees. Most employment contracts now contain arbitration clauses that require workers to use arbitration to settle all disputes with their employer.

There are several problems with this, with the biggest one probably being the fact that arbitration agreements prevent a lot of cases from ever getting a hearing. Because arbitration is not equipped to handle class actions or collective actions, individuals with small claims against their employer don’t have the opportunity to combine their claims in order to justify the costs of filing the complaint. Without this protection, many small claims go unresolved. Continue reading

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Although the federal Fair Labor Standards Act (FLSA) provides legal protection and ensures certain rights to hourly, non-exempt workers throughout America, the laws are not so clear when it comes to outsourcing.

As companies continue to downsize their workforce, the work that needs to be done either needs to be covered by the employees who remain on the payroll or outsourced. But when contractors develop close business relationships with their subcontractors, the line between contractor and employer can get blurry.

In a recent collective action against Commercial Interiors Inc. and J.I. General Contractors, the Fourth Circuit Court wrote its own plan for determining when a contractor bears responsibility for the employees of its subcontractor.

The collective action wage and hour lawsuit was filed by a group of employees who installed drywall for J.I. and Commercial. They were legally considered employees of J.I. because J.I. was the one that signed and distributed their paychecks, but they did a lot of work for Commercial. Continue reading

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As arbitration agreements between employers and their workers become increasingly common, more and more companies are requiring employees to sign the agreements as a condition of employment. This leaves workers in a tough spot because, although they are technically signing the agreement of their own free will, for those who are in desperate need of a job the option to sign an arbitration agreement or continue looking for work isn’t much of a choice at all.

Tania G., a former warehouse worker for Michael Kors, filed a class action wage and hour lawsuit against her former employer for allegedly denying her and other warehouse workers minimum wage, overtime pay, and regular breaks throughout the day, as required by both the federal Fair Labor Standards Act (FLSA) and California labor law. Michael Kors had the suit moved to federal court and is now trying to get it banned from the courts altogether and moved into arbitration in accordance with an arbitration agreement Terry G. allegedly signed as part of her employment contract. Continue reading

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In order for plaintiffs to successfully file a class action or collective action lawsuit against a common defendant, one of the things they need to be able to prove is that they were all subject to the same, systematic treatment by the defendant. In wage and hour class action lawsuits, this means the alleged misconduct needs to be a standard part of the defendant’s practices. Even an unwritten rule can be subject to a large lawsuit if it resulted in employees consistently receiving the same treatment.

When plaintiffs from six different states all allege they were subjected to similar mistreatment by their employer, their petition for class action or collective action stands a pretty good chance of getting the OK from a judge.

In early 2014, seven current and former service technicians for General Electric Co. all alleged they had not been properly compensated for the time they spent working under the federal Fair Labor Standards Act (FLSA) and various state laws. The technicians worked for the power company in Delaware, Massachusetts, Pennsylvania, New Jersey, Georgia, and Florida. Not only was their petition for collective action granted, but the wage and hour lawsuit was also combined with a similar lawsuit that had been filed in Florida against GE the year before. Continue reading

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Normally, when a party involved in a lawsuit appeals the decision, it’s because that party lost their case in the lower courts and are hoping the higher court will be more favorable to their side of the argument. The winning party does not usually encourage the higher court to reopen their case case, but that’s exactly what Murphy Oil USA Inc. is doing after the Fifth Circuit Court ruled in its favor in a lawsuit against the National Labor Relations Board (NLRB).

The NLRB sued Murphy Oil, saying the mandatory arbitration agreements included in its employment contracts illegally denied workers their right to file a class action lawsuit against the oil company. The Fifth Circuit ruled in Murphy Oil’s favor, saying the Federal Arbitration Act gave businesses the right to settle disputes in arbitration, rather than in the courts.

The problem is the Federal Arbitration Act was designed to allow businesses to settle disputes with other businesses in arbitration, not for businesses to settle disputes with individuals. Furthermore, arbitration does not allow plaintiffs to combine their claims into class actions, which means many small claims never get the chance to be resolved through either arbitration or trial because they’re too small to justify the costs of bringing the suit. Continue reading

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The federal Fair Labor Standards Act (FLSA) was enacted in 1938, in the middle of the greatest economic depression this country has ever seen, in order to protect the rights of workers who might otherwise be vulnerable to exploitation by their employers. In addition to defining overtime and requiring employers to pay all their hourly workers one and one-half times their normal hourly rate for all the overtime they spend working, the FLSA also allowed certain employees to be held exempt from overtime compensation if they earned a salary of $23,660 per year.

In addition to the salary requirement, the FLSA classifies employees as overtime exempt based on particular job responsibilities. This mandate divides exempt employees into three categories: administrative, covering employees who perform primarily office work and provide assistance directly to an executive; executives, meaning those who spend the majority of their time at work managing other employees; and professionals, whose jobs require them to have a certain set of skills or level of education in order to perform their jobs.

The current salary limit of $23,660 per year was substantial at the time it was enacted, but now it’s barely enough to make a living on and makes up just half the average American household yearly income. In order to take this inflation into account, the U.S. Department of Labor (DOL), has proposed a new rule that would double the salary requirement for overtime exemption to $47,476 per year. Continue reading

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According to four lead plaintiffs in a newly-certified collective action wage and hour lawsuit against PNC Bank NA, the bank allegedly promised mortgage loan officers a salary of $24,000 per year – an amount they claim was supposed to be based on a 40-hour work week. But according to the lawsuit, more often than not, the mortgage loan officers worked well over forty hours a week, and yet they were allegedly never paid for the additional hours they worked.

According to the overtime lawsuit, many current and former employees who worked as mortgage loan officers for PNC allegedly worked well over 40 hours a week and often took work home in order to get caught up. Despite these additional hours, the collective action lawsuit alleges PNC deliberately failed to properly keep track of all the hours worked by its mortgage loan officers, and as a result, failed to properly compensate them for all the time they spent working.

The wage and hour lawsuit further alleges that PNC made its branch managers complicit in the illegal denial of wages and failure to record all the hours the mortgage loan officers worked. According to the complaint, PNC would allegedly deduct wages from the managers’ pay based on the amount of overtime that was paid to mortgage loan officers who worked under them. Continue reading

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Although courts across the country don’t always agree on whether arbitration agreements with employees should be enforced as a general rule, sometimes the fate of a particular arbitration agreement lies in a technicality. In the case of a recent proposed class action wage and hour lawsuit against Century Fast Foods Inc., a Taco Bell franchisee, that technicality revolves around the ambiguity of the term “related companies.”

Jesus M., a former employee who worked at a Taco Bell restaurant owned by Century, filed a wage and hour lawsuit on behalf of himself and all other similarly-situated current and former employees of the franchisee for allegedly denying them overtime, legally-mandated rest breaks under California labor law, and other claims. Century tried to invoke the arbitration agreement Jesus signed when he filled out an application to work for Taco Bell, but so far two courts have denied the company’s petition.

According to Century, Jesus signed a contract that included an agreement to use arbitration to settle all disputes with Taco Bell, as well as its related companies. The problem, according to the courts, is defining the term “related companies.” First the Los Angeles Superior Court said in 2015 that Century failed to prove it qualified as a “related company” of Taco Bell. Century appealed the decision and the case went before a California appellate court, which upheld the lower court’s ruling.

According to the appellate court, Century failed to provide sufficient evidence that there was an agreement between itself and Taco Bell that Century was a related company of Taco Bell. In it’s published decision, the court also pointed out that it had not seen sufficient evidence that Jesus could reasonably be expected to understand that Century was a related company of Taco Bell, and therefore subject to the arbitration agreement he had signed with the fast food chain. Instead, the court suggested it would have been more convincing if the franchisee had provided a separate contract for employees to sign that included an arbitration agreement between Century and its employees. Continue reading

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Under the federal Fair Labor Standards Act (FLSA), all hourly, non-exempt employees are entitled to one and one-half times their normal hourly rate for all the overtime they spend working. It sounds simple enough, and for most workers it is, but employers need to make sure they’re including all the compensation earned by workers when calculating their overtime rate.

An overtime class action lawsuit against the U.S. division of Weatherford PLC alleges, among other things, that the oil company failed to properly calculate employees’ overtime rates. According to the wage and hour lawsuit, the company did not take into account certain bonuses (called “wellness bonuses”) that employees had earned when calculating the premium overtime compensation they should be paid when working more than eight hours a day or forty hours a week.

The class action lawsuit, which was filed in California in 2014, also alleges that Weatherford illegally denied workers compensation for the meal breaks they worked through.

Although the FLSA does not require employers to provide their workers with breaks throughout the workday, some state labor laws do, including California. Under California labor law, all hourly, nonexempt workers are entitled to one, paid, uninterrupted rest break of at least ten minutes for every four hours they spend working. For every five hours worked, employees are entitled to one, unpaid, uninterrupted meal break lasting at least half an hour. For every day an employee does not take one of these breaks, for any reason, that employee is entitled to one hour’s worth of pay, in addition to all other wages, bonuses, tips, etc. earned that day. Continue reading

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For the past few years, many of the large employers across the country have had to face the possibility of redefining what they consider to be “work.” The federal Fair Labor Standards Act (FLSA) does not provide a definition of “work,” although the U.S. Department of Labor (DOL) does define a “workday” as beginning with the first “principal activity” the employee performs and ending with the last “principal activity” they perform. But what can and cannot be considered a “principal activity” has long been debated between employers and their workers.

In general, anything that is required by the employer and provides a direct benefit to the employer qualifies as a “principal activity,” but the courts continue to go back and forth about the kinds of activities that meet this requirement. For example, many employees argue that the time they spend putting on protective gear when they’re required to wear it while performing their jobs constitutes a principal activity, and as such, they should be paid for that time. Not every employer agrees with that assertion and the DOL itself has gone back and forth on whether employees should be paid for that time. Continue reading