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Northern District of Illinois Finds That Plaintiff’s Bankruptcy Does Not Prevent Her From Bringing an Overtime Claim in Nehmelman v. Penn National Gaming, Inc.

Sometimes employment issues get mixed with other areas of law that can affect the outcome of a case. One such area of law is bankruptcy. When people are behind in their debt payments to the point where creditors threaten to foreclose upon their home or seize their other assets (such as the car), one option they have is to declare bankruptcy. People who file for bankruptcy usually file under either Chapter 7 (where assets are liquidated — or sold — to pay creditors) or Chapter 13 (where debts to creditors are restructured to be more manageable). When people file for bankruptcy, a trustee is put in charge of the person’s assets. When that happens, questions may arise as to whether the person has any power at all over his or her assets. That normally wouldn’t be an issue here, unless the assets in question were wages, requiring an Illinois overtime attorney to step in.

In Nehmelman v. Penn National Gaming, Inc., Plaintiff Rosa Nehmelman sued defendant on behalf of herself and similarly situated employees for violations of the FLSA and the Illinois Minimum Wage Law (IMWL). She claimed that the defendants failed to pay certain employees for all hours worked per shift or for hours worked in excess of 40 per week. The plaintiff worked as a Dealer and Slot Rep at one of the defendants’ casinos in Illinois. She was paid on a per-shift basis rather than hourly, with the shifts adding up to 40 hours per week. However, several times, the employees worked longer than 40 hours per week without receiving any overtime pay. Dealers and Slot Reps were allegedly required to clock in seven minutes before their shift began, and often worked past the end of the shift concluding ongoing games, closing out tables, and waiting for the new shift employees to arrive.

The defendants argued that because the plaintiff had declared Chapter 7 bankruptcy, she had no power to sue over wages owed because all of her assets, including wages, were controlled by a trustee. To obtain overtime wages, the trustee or the plaintiff’s creditors would have to sue, not the plaintiff. Even if the plaintiff had the power, the defendants argued that the plaintiff was judicially estopped from claiming overtime wages because she failed to disclose these wages in her bankruptcy filing. Under bankruptcy law, you cannot hide a claim to assets and then pursue it later. The defendant sought to have the case dismissed.

Judge Sheila Finnegan disagreed. Even though the plaintiff had filed for Chapter 7 bankruptcy, it only applied to the plaintiff’s wages before she filed for bankruptcy. Since the plaintiff continued to receive paychecks, the plaintiff remained an interested party in the case. Therefore, the plaintiff had the power to sue for overtime wages owed, and was not judicially estopped from receiving any wages owed after her bankruptcy filing. The court denied the defendant’s motion to dismiss and allowed the case to move forward.

The attorneys at Chicago Overtime Law Center have decades of experience litigating wage and hour cases, including overtime, vacation pay, meal breaks, and tips. The Chicago Overtime Law Center has offices conveniently located in Oakbrook Terrace and Chicago, Illinois. If you live in Illinois and have a wage and hour dispute, contact a Rockford overtime attorney today at 312-869-4095.