Overtime Lawyer Blog

A New York Supreme Court judge has rejected precedent in determining that beauty salon workers may bring a claim for retaliation based on claims they were denied overtime pay.

The Fair Labor Standards Act (“FLSA”) provides that eligible employees must be paid overtime at a rate of one and one-half their regular rate of pay. Additionally, many states have overtime laws that incorporate the FLSA and may provide substantive and procedural advantages over the FLSA.

In Ji v. Belle World Beauty, the court reviewed a provision of New York’s Labor Law incorporating the FLSA with respect to overtime. Writing for the court, Judge Emily Goodman explained based on prior case law “some form of overtime compensation is appropriate.” Further, retaliation for complaining about violations of overtime law could support a violation as well. The court concluded that the previous ruling that held “there are no provisions governing overtime in New York Labor Law” misconstrued an earlier decision.

Nearly all U.S. employers are governed by the Fair Labor Standards Act. As a result, nearly all employees who are not exempt must receive overtime compensation. Although state laws may differ, employees who fail to receive adequate overtime compensation may be able to bring a claim for a violation of the FLSA or similar state provision.

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Earlier this week, five computer-network technicians filed suit against Goldman Sachs Group Inc., claiming that they failed to receive all overtime compensation due.

At issue, whether the technicians are considered contractors or employees. Under the Fair Labor Standards Act (FLSA), all employees who are not exempt must be paid at a rate of one and one half times their regular rate of pay for all hours worked in excess of 40 hours in any workweek. This straightforward sounding rule is incredibly complex, and is at the root of countless lawsuits.

In Bardouille v. Goldman Sachs & Co., technicians alleged that they worked more than 70 hours in a week, yet were denied overtime. More than 100 employees in New York and New Jersey were also allegedly underpaid.

Whether an individual is classified as an “employee” or “independent contractor” has significant implications for many businesses, and may substantially impact an individual’s rights to benefits and overtime compensation. Often no one specific factor conclusively answers how certain workers are categorized. Rather, courts look at a variety of factors to determine the nature of the relationship. The more evidence of an employer exercising supervision, direction and control of an individual’s work, the more likely an employer/employee relationship will be found.

Some considerations include:

• If the employer determines when, where and how services will be performed
• Whether the employer provides a facility where work is performed
• The amount of supervision provided
• Whether the employer or the worker determines the rate of pay
• The exclusivity of services
• Whether permission is required for absences
• How the worker is compensated, i.e. by salary, hourly rate of pay, or on commission

Where an employee relationship is found, workers may be entitled to substantial sums in terms of benefits and overtime compensation.

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The Federal Labor Standards Act (FLSA) guarantees certain minimum wage and overtime standards applicable to virtually all U.S. employers. Not covered though – the hundreds of thousands of workers who tend to the sick and elderly in their homes.
Earlier this week, Representative Linda Sanchez (D-Calif.) introduced legislation designed to change that. The Sanchez bill seeks to extend the FLSA to cover home care workers – including certified nursing assistants and home health aides – currently exempted by the FLSA. Many point to this exclusion as creating a home care workforce that earns less and works longer hours than most other professions, placing them amongst the lowest paying jobs in the county.

If afforded protections under the FLSA, home health care workers would be entitled to a federal minimum wage of $6.55 per hour and overtime at a rate of one and one half times their regular rate of pay.

The Department of Labor also seeks to address the issue of those providing home health care aid – also called “companionship services” through new regulations, and has indicated that it will issue a proposed rule in October 2011.

As Georgia attorneys dedicated to employee’s rights, we will be following these developments closely and reporting on any changes to the FLSA in this blog.

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The Fair Labor Standard Act (the FLSA) provides certain guarantees to employees such as requiring a minimum rate of pay and that eligible employees must be paid overtime at the rate of 1 ½ times their regular rate of pay.

In addition to federal law, many states have overtime laws. Often, these laws may offer greater employee protections than the FLSA, and may provide substantive and procedural advantages over the FLSA. In many cases, employees are able to choose between filing in state or federal court.

In a recent case involving California and Texas employment law, the U.S. Court of Appeals for the Ninth Circuit held that where the complained of actions arose out the nature of employment arrangement, rather than the terms of a contact, “the choice of law provision” contained in the driver’s employment agreements was not dispositive.

In Narayan v. EGL Inc., three California drivers brought a claim against a trucking company alleging that they were denied overtime pay, expense reimbursements, and meal periods required by California law. However, each of the drivers had previously signed independent contractor agreements providing that the agreements “shall be interpreted by the State of Texas.” Although the company argued that Texas law must apply, the Ninth Circuit disagreed, reasoning Texas choice of law provisions only refer to contractual issue. Because the drivers brought their claims under “a California regulatory scheme, the court determined they were entitled to have their claims interpreted pursuant to California law.

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In a recent decision, Alvarado v. Corporate Cleaning Service, Inc., a federal judge for the Northern District of Illinois determined that window washers may proceed against their employer with a claim for overtime benefits under the Fair Labor Standards Act (FLSA).

The FLSA provides that all employees who are not exempt from the FLSA must be paid overtime benefits at a rate of one and one half times their regular rate of pay for all hours worked in excess of 40 hours in a work week.

In Alvarado, the window washers often worked between 60 and 70 hours per week, but never received overtime premiums. Despite the employees’ demands for payment, the employer asserted that the window washers were exempt from the FLSA because they were partially paid on a commission-based compensation system. Under the FLSA, employees who receive more than half their compensation in the form of “commissions on goods or services” are generally not entitled to overtime payment.

Determining whether a “commission-based” compensation scheme exists is not always clear-cut. Case law has found a commission-based system exists where compensation is linked to the price charged to the consumer for the good or service being sold and where compensation is “related to the value of the service performed.”

Although some evidence indicated that the window washers were paid a commission – i.e. the window-washers were paid on a point system rather than an hourly wage – additional evidence showed that the employer was inconsistent in charging customers in this manner. As a result, the federal judge denied the employer’s motion for summary judgment and allow

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On June 16th the Labor Department’s Wage and Hour division issued a new interpretation regarding compensation for time spent changing clothes under the Fair Labor Standards Act.

Pursuant to the FLSA, Sec. 29 U.S.C. Sec. 203(o), under certain circumstances employers may exclude the time spent changing clothes from employee’s compensable time. Previous Bush-era interpretations concluded that the exclusion extended to protective clothing.

Stating that these interpretations should no longer be relied upon, the WHD administrator concluded that employers are not excused from paying employees for time spent “donning and doffing” protective equipment that is “required by law, by the employer, or the nature of the job.”

This interpretation follows several recent cases that have evaluated whether individuals – such as firefighters – are entitled to pay for time spent donning and doffing.

Emphasizing the difference between the plain meaning of the term “clothes” and the protective equipment worn by workers such as in the meat packing industry, the WHD administrator determined that compensating those who must don and doff protective clothing and equipment “adheres most closely” to the guidance provided by statutory language and legislative history.

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Under the Fair Labor Standards Act (the FLSA) non-exempt employees are entitled to minimum wages and overtime pay at a rate of one and one-half times their regular rate for all hours worked in excess of 40 hours in any workweek. When employers misclassify employees as “independent contractors” – mistakenly or not – employees may lose substantial amounts of overtime compensation.

In a recent case, a federal court in Indiana ruled that FedEx workers are employees of the company and not independent contractors.

Applying Illinois law, the court determined that the FedEx workers duties and actions were in furtherance of FedEx’s course of business, and hence not excluded from the legal definition of employee.

In making its determination, the court reasoned that such factors as the requirement that the drivers wear FedEx uniforms and drive trucks displaying FedEx logos, along with testimony from FedEx officials that drivers are the “centerpiece” of the workforce created an employment relationship. FedEx’s relationship with its drivers could be distinguished from other messenger delivery companies wherein the drivers were allowed to work for other delivery companies and weren’t required to wear uniforms.

FedEx drivers were also subject to other rules such as being required to pick up packages at a FedEx terminal, meet company approval, and follow a prescribed delivery list. Each one of these actions showed a connection between the worker’s action and the company. Hence, the court determined their appropriate classification was as employees and not independent contractors.

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Many times numerous employees are exposed to certain patterns or acts of discrimination by the same company. Discrimination may occur in many different ways, such as in the way overtime is calculated, in the failure to promote or hire groups based on tests scores and imposing dress-codes or English-only laws.

Often the best and most efficient way to seek redress for the same discriminatory action across a group of employees is to file a collective action. In order to bring a collective action, the plaintiffs must demonstrate that all of the potential members were “similarly situated.”

In a recent case, University of Phoenix enrollment counselors sought to bring a class action based on overtime violations of the Fair Labor Standards Act against the University’s parent company, Apollo Group, Inc.

At campuses across the country, counselors were required to meet specific performance goals each week. The counselors were told that they would not be compensated for overtime if it took more than 40 hours to complete these tasks. In fact, plaintiffs were told they had to meet certain goals and they [the managers] didn’t care how they met them.”

In making its determination on the collective action, the U.S. District Court for the Eastern District of Pennsylvania considered whether the counselors fit the “similarly situated” criteria.

Factors considered included:
• Consistent performance requirements of employees throughout the company;
• Similar overtime practices at all locations; and
• Difficulty by employees at all campuses completing required tasks during an eight-hour workday.

Here, the court held that the evidence presented was sufficient to demonstrate that the class members experienced an injury resulting from an employment policy affecting all members in a similar fashion. As a result, conditional certification was justified, notwithstanding the existence of a company policy providing for overtime compensation.

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The Court of Appeals for the Fifth Circuit affirmed the lower court’s determination that a staffing company violated the Fair Labor Standards Act (FLSA) when it failed to include a per diem payment in its “regular rate of pay” calculation.

Pursuant to the FLSA, all non-exempt employees must be paid at a rate of one and one half times their regular rate of pay for all hours worked in excess of 40 hours in any workweek. “Regular rate” is defined under the act as “all remuneration for employment.” The overtime rate then become s a mathematical computation based on a factual determination.

In Gagnon v. United Technisource, Inc. an employee – a skilled craftsman – was paid $5.50 per hour plus a $12.50 per diem per hour payment by a staffing company. The typical rate of pay for his position was as much as $24 per hour.

The lower court acknowledged that in some instances per diem payments are not included in the regular rate of pay analysis. In this instance however, the court was suspicious that the payment schedule was designed to circumvent overtime laws. A skilled craftsman typically earns 3-4 times the rate of pay offered by the staffing company. The court noted that they were “troubled by the fact that the combined ‘straight time’ and ‘per diem’ hourly rates matched the prevailing wages.”

The court likened this fee arrangement to other situations where employers artificially lower an employee’s regular rate of pay as a bonus in order to avoid paying a premium for overtime work.

As a result, the lower court held it was a violation not to include the per diem payments as part of the “regular rate of pay” calculation. The 5th Circuit affirmed.

Overtime premiums can be a great source of extra income to employees. However, in order to avoid paying employees the total compensation due, some employers and companies try to alter how overtime is calculated. In most cases when an employer mischaracterizes your rate of pay, they have violated the FLSA.

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The U.S. Court of Appeals for the 7th Circuit determined this week that where common questions predominate, individuals – in this case paramedics – may be “similarly situated” (and hence suitable for determination as a class) even though each person’s recovery must be determined separately by a subset of common questions.

Here, a group of 54 paramedics brought a collective action under the Fair Labor Standards Act (the “FLSA”) based on the City of Chicago’s miscalculation of overtime pay. The case was later certified and more than 300 paramedics consented to the action. Several types of counting errors were alleged, resulting in 10 different subclaims. Although each paramedic alleged a miscalculation of pay, different combinations of challenged practices affected the amount owed to each individual.

The District Court dismissed the collective action as being “hopelessly heterogeneous,” holding that the paramedics were not “similarly situated” because each individual’s matter raised a different combination of the 10 subclaims. The District Court also found that although paramedics were not required to pursue claims using grievance/arbitration procedures, arbitration would be more efficient way to resolve the disputes.

The 7th Circuit Court of Appeals reversed, finding that if the paramedics prove liability, recovery will be based on a mathematical formula common to all class members. As a result, it was error for the District Court to dismiss the matter.

Often an employer engages in a common type of inappropriate or adverse behavior – in this case allegedly intentionally failing to pay paramedics overtime rightfully due – that affects a large group of employees similarly. Here each employee allegedly received less pay than they were entitled to – although the specific calculation of how much may be a based on a formula. If you are part of a large group of workers who have been denied compensation, including overtime or benefits, you may be entitled to file a claim for violation of the FLSA either individually or collectively.

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In a recent case, the 11th Circuit Court of Appeals reviewed whether a black probation officer, Welton Thomas, who was fired allegedly due to repeated violations of its overtime policy, was a victim of race bias and retaliation.

The court determined that he was not, in part because Thomas failed to satisfy the “nearly identical” standard. This standard provides that a prima facie case for race discrimination exists where an employee of a protected class can demonstrate he received less favorable treatment in a “nearly identical circumstance” than an employee from a non-protected class. Even if he had met the “nearly identical” burden, the court noted that Thomas’ repeated failure to follow the department’s overtime policy exposed it to liability under the Fair Labor Standards Act (the “FLSA”) and created a legitimate, non-discriminatory reason for termination.

Here – a worker’s actions by doing more than what was required of him cost him his job. Under the FLSA, whenever an employer requires or “suffers” the employee to work overtime house, non-exempt employees must receive over-time compensation (typically at a rate of one and one-half times your rate of pay). Employers are also permitted not to allow overtime. Well-intentioned employees who work extra hours without reporting it, may ultimately end up out of work if these hours have not been approved – even if the hours benefit the employer.

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Early this month the Supreme Court declined to hear an appeal from the 2d Circuit’s November 2009 determination that a home equity loan underwriter was entitled to overtime pay under the Fair Labor Standards Act (the “FLSA”).

Under the FLSA, employers are required to pay “non-exempt” workers overtime, typically at a rate of 1 ½ times your hourly rate for each hour over 40 worked in a work week. Alternatively, if you perform certain types of work, then you are “exempt” from overtime laws and your employer is not required to pay your overtime, regardless of how many hours you work.

In J.P. Morgan Chase & Co. v. Whalen, the 2d Circuit Court of Appeals determined that a home equity underwriter – Andrew Whalen – was entitled to overtime pay. The court’s analysis focused on the distinction between “production” and “administrative” work duties. Where an employee’s primary duties are considered “production” i.e. related to the production of goods and services, in most cases no exemptions apply and overtime must be paid. However if the duties are administrative – i.e. directly related to the management or general business operations of the company and involving the exercise of discretion or independent judgment with respect to important company business, then an employee may be considered exempt and not entitled to overtime.

In Whalen, the underwriter was required to follow a detailed “credit guide” to determine whether to approve loan. The 2d Circuit Court reasoned that while performing these duties, Whalen used little ‘independent judgment’ or discretion, rather his work fell under the category of production work - i.e. he was “directly engaged in creating the ‘goods’ – loans and other financial services- produced and sold by Chase.” As a result, he was entitled to overtime compensation. On May 3rd, the S.Ct. declined to review this ruling.

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Under the Fair Labor Standards Act, independent contractors are not entitled to benefits such as minimum wages, overtime, worker’s compensation and unemployment insurance. State and federal anti-discrimination laws often do not protect them.

As a result, being classified as an independent contractor or as an employee can have significant legal and financial implications. Many employers either mistakenly or intentionally misclassify employees as independent contractors or non-employees in order to avoid paying adequate wages and overtime.

In an attempt to rectify this problem, lawmakers have recently introduced the “Employee Misclassification Prevention Act” aimed at reducing misclassification errors.

The Act includes the following provisions:

• Employers must keep accurate records of each workers’ status and clarifying that it’s a violation of the FLSA to misclassify workers;
• Increased fines for misclassification;
• Workers must be notified of their classification;
• Creation of an “employee’s rights website” containing relevant information concerning state and federal wage and hour issues;
• Workers who are discriminated/retaliated against for requesting proper classification will be protected;
• Mandating state audits of classifications along with DOL oversight; and
• Directing DOL to audit employers in industries with routinely misclassified employees.

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Police officers are not entitled to pay under the FLSA for time spent putting on and taking off their uniforms. According to the 9th Circuit Court of Appeals, time spent ”donning and doffing” uniforms doesn’t entitle the officers to pay if they’re not required to change at the workplace and they have the option to change at home Bamonte et al. v. City of Mesa, No. 08-16206, 2010 WL 1131492 (9th Cir. Mar. 25, 2010).

Under the FLSA, activities, which are an “integral and indispensable part” of an employee’s workday, are compensable. Here, police officers filed a claim against the City of Mesa for time spent changing into their uniforms at the police station.
In determining whether the officers were entitled to compensation, the court focused primarily on the location where the changing occurred. The court cited a Department of Labor memorandum that indicated “donning and doffing of required gear is only considered part of the work day where the job mandates that the changing takes place on the employer’s premises.”

Here, because the police officers were not required to change at the station but have the option of changing at home, the 9th circuit determined that the police officers were not entitled to compensation.

Further, the court noted the uniforms the officers were changing into were “generic protective gear” and not specific uniforms designed for the employer’s benefit.

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