Articles Posted in Misclassified Employees

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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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The federal Fair Labor Standards Act (FLSA) defines overtime as any time spent working after eight hours a day or forty hours a week. The Act requires all employers to pay their hourly workers one and one-half times their normal hourly rate for all overtime worked. There are some exceptions, but the FLSA is very specific about the types of employees that can qualify for the overtime exemption.

The FLSA provides three categories of employees that can qualify for the overtime exemption: administrative, executive, and professional. Rather than letting employers simply put their workers in a convenient category, the FLSA defines the responsibilities each type of employee must have in order to qualify for the overtime exemption. Continue reading

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The federal Fair Labor Standards Act (FLSA) provides numerous protections to employees working all over the country. These protections make sure employers don’t take advantage of their workers. In order to do this, the FLSA regulates things like minimum wage and overtime.

In addition to the federal Act, each state has their own labor laws regulating employment within the state, so employers conducting business in the U.S. need to make sure they are abiding by all the relevant local laws, as well as federal law. Continue reading

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State and federal labor laws exist to protect all employees working within the United States. They make sure employers don’t take advantage of their workers by regulating things like minimum wage, overtime, and what constitutes compensable time.

Labor laws also forbid employers from requiring workers to cover business expenses. All business-related expenses should be covered by the employer. If a situation arises in which an employee must pay for something for the business, the employer is required to reimburse the employee in a timely manner (usually by the next pay period). According to a recent wage and hour class action lawsuit against Cracker Barrel, the restaurant chain allegedly failed to fulfill these reimbursements.  The chain denies all of the claims and asserts it complied with the law. Continue reading

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It’s true that, under the federal Fair Labor Standards Act (FLSA), certain employees can legally be exempted from overtime pay. However, it might be more accurate to say that certain job responsibilities are exempt from overtime. In order to qualify for the exemption, an employee needs much more than just a salary and a certain title. The Act requires employees to spend the majority of their time performing specific duties in order to be exempted from overtime compensation.

The FLSA has divided the employees that can be exempt from overtime into three main categories: administrative, executive, and professional. The administrative category consists of employees who perform primarily office work and provide administrative assistance directly to an executive. An executive must spend the majority of her time managing other employees, be able to discipline those employees, and have significant say in the hiring and firing of those employees. The professional category covers all workers whose jobs require a certain level of education or set of skills to complete. Continue reading

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The federal Fair Labor Standards Act (FLSA) requires employers to pay their workers one and one-half times their normal hourly rate of pay for each hour that the employees work beyond eight hours in a day and forty hours in a week. Although the FLSA does provide for certain exceptions to this requirement with specific categories of employees, employers will sometimes try to avoid paying their employees overtime by mislabeling them. This is against the law and employers who intentionally mislabel their employees in order to avoid paying overtime are subject to wage and hour lawsuits.

Under the FLSA, an employee must be paid a salary of at least $455 per week and fit into one of three categories in order to qualify for overtime exemption. The first category is administrative and an employee must perform mostly non-manual office work which directly supports the company or its customers in order to qualify for this exemption. The second category, executive, consists of employees who primarily manage at least two other employees and have significant input into the job status of those employees. The third category is professional, and in order to fit into that category, an employee’s job must require a particular set of skills or level of education which is not common to most workers.

Employees are commonly mislabeled under the administrative category as employers will sometimes try to claim that any worker who performs mostly office work and is paid on a salary basis is eligible for overtime. Recently, RBS Citizens Bank agreed to settle a class action lawsuit of mortgage loan officers who were allegedly misclassified as exempt from overtime under the administrative category. The ten named plaintiffs of the class who filed the lawsuit “sought overtime premium compensation under the Fair Labor Standards Act (‘FLSA’) and the Pennsylvania Minimum Wage Act (‘PMWA’) on behalf of themselves and similarly situated mortgage loan officers (‘MLO’) employed by [RBS Citizens Bank] alleging that they were misclassified as overtime exempt,” according to the motion to certify the settlement that was filed by the plaintiffs.

RBS Citizens Bank provided an answer to the complaint which denied the allegations that it had misclassified its MLOs, insisting instead that it had properly classified all of its employees.”

Once the court certified the class, the parties entered into mediation in an attempt to settle the case outside of court. RBS Citizens Bank provided payroll data which included the weeks worked and annual compensation amounts for the relevant statutory period for each opt-in plaintiff and number of potential class members for the states of Pennsylvania, New York, New Jersey, Massachusetts, Rhode Island, Ohio, Illinois and New Hampshire for the past three years. The class counsel combined this data with estimates of hours worked by the MLOs who had joined in the litigation in order to create a damages model which outlined RBS Citizens Bank’s potential exposure if the two parties were unable to reach a settlement.

Most of the $3 million settlement will be distributed among the participating class members. The named plaintiffs will receive $22,000 in enhancement awards, $750,000 will go to the fees for the plaintiffs’ attorneys, about $20,000 will go to the costs of bringing the lawsuit, and $10,000 will be used to settle third-party claims.

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Because HR managers are generally more knowledgeable about employment law than most employees, it is usually part of their job to make sure that the company obeys all of these laws. HR managers also tend to be exempt from overtime, as they usually fit the requirements for the administrative category for overtime exemption. For these reasons, it is unusual to see an HR manager filing a lawsuit against her own employer for unpaid overtime. However, recent cases suggest that situations like this might actually be on the rise. One such lawsuit was filed by Lizeth Lytle against Lowe’s Home Center’s, Inc. Lytle is an HR manager and is filing the class action lawsuit on behalf of herself and all other HR managers for Lowe’s who were allegedly misclassified as overtime exempt and worked overtime.

While the federal Fair Labor Standards Act (FLSA) requires all employers to pay their employees the proper overtime compensation for all of the time that they work in excess of eight hours a day or forty hours a week, there are some exceptions to this rule. While those exceptions are broadly labeled as administrative, executive, and professional, merely having one of these labels is not sufficient to qualify for the overtime exemption. Rather, the FLSA provides specific requirements which an employee must be able to fulfill in order to fit into one of the categories.

For the administrative category, an employee must perform office work which is directly related to the management or the general business operations of the employer or the employer’s customers. The employee must also exercise independent judgment about matters of significance as a primary part of her job. In order to fit into the executive category, an employee must supervise at least two other employees, have genuine input into the job status of these employees, and managing must be her primary responsibility. Employees working in “learned professions” qualify for overtime exemption under the professional category as provided by the FLSA. This includes employees who require a particular education or set of skills in order to perform their jobs, such as doctors, lawyers, dentists, teachers, architects, etc.

Lytle worked as an HR manager at a Lowe’s store and claims that she was classified as exempt from overtime under the administrative category. She alleges, though, that her job duties were not sufficient to qualify her for the exemption. She allegedly did not exercise the necessary level of independent discretion and judgment necessary to meet the exemption and all meaningful employment decisions were made by employees that held higher positions in the HR department. Lytle alleges that “Each store [Human Resources] Manger required the approval of the Area Manager of the Store Manager when it came to making any decisions affecting the store or Lowe’s.” Ltyle also alleges that “All [Human Resource] managers were required to work overtime.”

Lytle provided the declarations of about 60 current and former HR managers for Lowe’s to support her allegations against her employer. These included HR managers who worked at Lowe’s locations other than the store Lytle worked at to prove that the problem is company-wide and not an isolated incident.

The lawsuit is seeking compensation for unpaid overtime, liquidated damages, pre-judgment and post-judgment interest, attorneys’ fees and other costs, and an injunction to prohibit Lowe’s from continuing these illegal employment practices in the future. The court certified the class and the wage and hour lawsuit can now proceed as a class action.

You can read the opinion here.

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Some employers try to get out of paying their employees overtime by giving them a salary and classifying them as managers. Many employees are unfamiliar with the requirements for overtime exemption as laid out by the federal Fair Labor Standards Act (FLSA). As a result, when their employer tells them that they do not qualify for overtime compensation, many employees take their employer’s word for it rather than question the classification.

Although the FLSA does provide overtime exempt status for some salaried employees, it requires more than just the payment method and the job title to exempt employees from the proper overtime compensation. There are three categories for overtime exemption, each of which has specific job requirements. The first is administrative and requires that the employee provide administrative assistance directly to an executive. The second category is executive and requires that the employee’s main responsibilities consist of managing other employees. This category frequently gets confused with managers who spend part of their time managing other employees, even if the majority of their duties remain those of an hourly employee. The third category is professional and specifies that the employee must have a particular set of skills or education in order to perform her job.

In a recent overtime class action lawsuit against TaxPrep1, a Florida franchisee of Jackson Hewitt Inc., employees allege that the company deliberately misclassified them as managers and paid them a weekly salary in order to avoid paying them the proper overtime compensation of one and one-half times their normal hourly wage. The lawsuit also alleges that the company “forced” employees with the title of “manager” to work significantly more than the standard 40 hours per week without paying them for the extra hours. Despite the fact that these employees were classified as “managers” the overtime lawsuit alleges that, rather than spending the majority of their time managing other employees, their duties remained the same as the duties they performed as hourly employees. The only difference was their weekly salary.

The overtime class action lawsuit was filed by Lisa Kelly and Sharon Parker in the U.S. District Court for the Middle District of Florida. Both Kelly and Parker still work for TaxPrep1 and they allege that someone higher up in the company knew exactly what they were doing when they misclassified their employees as managers and switched their pay from an hourly rate to a salary. Kelly and Parker are seeking to represent a class of similarly situated employees who are likely unaware that they have been cheated out of their overtime compensation. They believe that there are as many as 80 or 90 employees who could potentially join the class. The overtime lawsuit is seeking compensation for the unpaid overtime wages in addition to attorneys’ fees, liquidated damages, and other costs. The total is estimated to be around $1 million, but the final number will depend on how many employees choose to join the class.

Jackson Hewitt was one of the largest tax preparation services before they declared bankruptcy. They were right behind H&R Block, which only goes to show that even large, trusted companies sometimes violate employment law. For this reason, it is a good idea for employees to make sure that they become aware of the federal requirements for overtime exemption to make sure they are not cheated out of their earned wages.

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Many employers like to encourage a strong work ethic among their employees. If the attitude is “You work until the job is done”, then employees might be less inclined to worry about overtime pay.

That strategy seemed to work for a while for Ventura County in keeping its social workers working overtime without compensation. That is, until a 9th Circuit Court ruling found that the social workers were not eligible for overtime exemption under the current labor law. After the court came to this conclusion, the social workers filed an overtime class action lawsuit against Ventura County seeking three years of back wages.

According to the federal Fair Labor Standards Act (FLSA), an employee must fit into one of three categories in order to be considered eligible for overtime compensation. When considering these categories, the FLSA accounts for more than just the employee’s job title. It also considers the employee’s main responsibilities. To fit into the first category, administrative, the employee must provide administrative assistance directly to an executive. In order to qualify for the second category, executive, an employee’s main responsibilities must consist of managing other employees. For the third category, professional, an employee’s job must require a particular set of skills or training.
The social workers of Ventura County, California were put into the third category. However, the overtime class action lawsuit alleges that the social workers did not have to follow an advanced, specialized course of study in order to get their jobs so they do not fulfill the qualifications for the exemption.

The 9th Circuit Court’s ruling regarding overtime compensation was reached in September 2011. Ventura County reportedly dragged its feet in responding, but the Board of Supervisors did finally vote to change 25 job classifications in order to comply with the decision.

Lydia Salinas, one of the social workers in the case, alleges that she regularly worked 10 to 15 hours of overtime each week dating back as far as 2010. She was involved in the investigation of alleged child abuse cases and she says that, as demand for prompt investigations increased, so did her workload. She says that she and the other social workers never considered overtime compensation because they thought their jobs were exempt from overtime.

The overtime lawsuit, filed in Los Angeles, California, consists of 103 class members, although as many as 174 social workers have been noted to have been affected by the misclassification. Thanks to a new ruling by the judge in the case, that number might increase dramatically. The judge decided that the interpretation of the class could apply to more employees, including those recently retired. That would boost the number of potential class members to about 200. As one might expect, this could mean millions of dollars in back wages that Ventura County may have to pay.

Another factor which will have an effect on the possible amount of back wages owed is a debate as to when the overtime liability should originate. The attorneys for Ventura County state that liability should begin with the 9th Circuit Court’s ruling. Others have pointed out however, that other jurisdictions in California had reclassified workers and begun providing overtime long before the court’s decision.

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Whether a manager qualifies for overtime exemption under the federal Fair Labor Standards Act (FLSA) is a tricky question for many employers and employees. Due to their status as manager, many people assume that they do qualify for the overtime exemption under the executive category. However, the FLSA specifies that more than just the employee’s job title is required in order to qualify her for overtime exemption. The Act also takes into consideration the employee’s main responsibilities. If the employee is a manager, but spends the majority of her time at work fulfilling the duties of hourly employees, then she cannot be classified as exempt from overtime compensation.

This issue seems to arise frequently in the retail industry and has recently done so again. A class of allegedly misclassified managers have filed a wage and hour class action lawsuit against BJ’s Wholesale Club Inc., one of the largest food retailers in the United States. The wage and hour lawsuit alleges that the employees were “required” to work more than forty hours a week without the proper overtime compensation. There are only a few positions at BJ’s which were classified as exempt from overtime, but the lawsuit alleges that these employees were misclassified.

The wage and hour lawsuit is asking the court to certify a class of employees who have worked for BJ’s since July 19, 2009 with job titles such as loss prevention manager, asset protection manager, and personnel manager. The lawsuit, which was filed in June 2012 in Massachusetts, is also seeking certification of a subclass of employees who worked for BJ’s in fifteen states, including Connecticut, Delaware, Florida, Georgia, Main, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, and Virginia. The lawsuit alleges that, by misclassifying a number of its managers, BJ’s Wholesale Club knowingly and intentionally violated the FLSA, in addition to state labor laws.

BJ’s has recently agreed to settle the lawsuit for $2.7 million. The settlement is currently awaiting approval by the court.

Many people are unaware of the specific requirements the FLSA provides for overtime exemption. Rather than looking solely at job titles, the Act carefully considers the employee’s main responsibilities to determine if she qualifies for overtime exempt status. For example, an administrative employee must provide administrative support directly to an executive in order to qualify for the overtime exemption. For the executive category, an employee’s main duties must consist of managing other employees who report directly to her. If an employee managers hourly employees, but spends the majority of her time performing the same duties as other hourly employees, then she does not qualify for overtime exempt status under the FLSA. The third category for overtime exemption is professional and that requirement is fulfilled when the employee needs a particular set of skills or education in order to perform her job. The FLSA mandates that any employee who does not meet these qualifications is entitled to one and one-half times their normal hourly rate for each hour that they work in excess of eight hours a day or forty hours a week.

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