Unpaid Overtime

Who Wins in Overtime?

January 7, 2015 | Parks, Chesin & Walbert

Perhaps drawing inspiration from the college bowl games and NFL playoffs, the world of employment law lately seems fixated on the intrigue of overtime, although more in the context of bonus pay than bonus play. While it may not be as thrilling as a Hail Mary pass or as heartbreaking as a missed kick (sorry, Auburn fans) to end the game, overtime as it relates to the Fair Labor Standards Act (FLSA) can have a major impact on both employers and employees, so it’s worth taking some time out from being an armchair quarterback to look at some of the latest developments.

Two big court decisions in December went against employees looking for overtime. The first came from the US Supreme Court in Integrity Staffing Solutions v. Busk. As covered previously on this blog, the case asked whether time—up to 25 extra minutes—spent in an internal security screening line at the end of one’s shift should be compensable. In a rare move for such divergent ideologies, the justices were unanimous in rejecting the notion that time spent in the line deserves to be time on the clock. Continue reading ›

Is Internal Loss Prevention Stealing Workers’ Wages?

October 9, 2014 | Parks, Chesin & Walbert

In Johnny Cash’s One Piece at a Time, the singer tells the story of an assembly line worker who longs for one of the cars he spends his days building. Instead of pinching pennies, he devises a plan to acquire that car little by little. With an over-sized lunchbox and some help from friends, the worker smuggles home pieces every day over the course of a couple of decades. By retirement, he ends up with a Frankenstein of an automobile whose many components required the entire courthouse staff to register and results in a title weighing sixty pounds.

The dream of a “psycho-billy Cadillac” may be a little far-fetched, but internal theft by employees remains a real concern for companies, particularly retail stores and other business that sell or warehouse popular, pricey, or scarce consumer products. To combat the threat, many businesses subject employees and their belongings to screenings for stolen items at the end of their shifts. In environments like large department stores, where shifts are staggered and the searches might take only a minute or two, the delay may be inconvenient at times, but it would be tough to argue that it’s overly burdensome.

On the other hand, there are facilities doing these kinds of checks with dozens, if not hundreds, of workers whose shifts begin and end together. As anyone who’s been though a TSA line at an airport can understand, funneling that many people through checkpoints is not a quick endeavor. Instead of a two-minute delay, people at the back of the line might be waiting 20 minutes or more after their shift ends just to leave the building. Should they be compensated for that time?

NLRB Decision Shakes Up Liability for Franchise Restaurants

August 25, 2014 | Parks, Chesin & Walbert

“McJobs” may soon come with a side of leverage for workers who find themselves the victims of labor law violations. In a surprising move, the general counsel for the National Labor Relations Board (NLRB) last month permitted regional directors to name McDonald’s Corp. as a joint employer along with its franchisees in several pending actions. This marks a major shift to the traditional liability issues in the franchise world, where franchisees are essentially independent contractors who pay royalties to use the systems and products of the parent company, but are solely liable for any labor law violations against their W-2 employees. While this move doesn’t carry the binding power of a ruling, the potential changes it brings caught plenty of attention from the franchise world.

Under this new model, the parent company could share in the responsibility for unlawful labor practices by their franchisees. Lawyers on the corporate sides argue that such responsibility for oversight of what could be tens of thousands of franchisees would be impractical if not impossible. Workers’ and labor groups, on the other hand, point out that the parent companies already exercise a great deal of influence and control in micromanaging almost every other aspect of the businesses, from stock to procedures to store design to intellectual property and advertising. Such strict control of day-to-day operations, they say, voids any industry arguments that ensuring franchisees adhere to labor standards would require extraordinary efforts.

The move by the NLRB goes beyond McDonald’s, fast food, or even restaurants in general and could affect all kinds of retail stores and service providers who operate on the the franchise system. Adding a layer of responsibility to the franchisor-franchisee relationship would come at some financial cost to the corporate home offices, even as the franchise establishment market continues to grow. Naturally, there’s been a collective freak-out by industries and companies around the country. The recurring speculative concern is that a corporate parent ensuring basic labor laws are followed at their franchises will somehow have a negative effect on job creation.

Federal Court in Georgia Conditionally Certifies Class of Home Service Consultants

June 25, 2014 | Parks, Chesin & Walbert

A federal court in Georgia recently permitted conditional certification of a class of Home Service Consultants in Randle v. AllConnect, Inc. The plaintiffs seeking conditional certification had charged that their employer, AllConnect, had failed to pay overtime compensation for all hours in excess of 40 per week, and that AllConnect failed to pay overtime compensation at the required overtime rate, in violation of the federal Fair Labor Standards Act (FLSA).

AllConnect was a company that provided third-party sales support for telephone and cable service providers. The main plaintiff, Ayisha Randle, worked at the Atlanta-based Allconnect call center from March 2012 through November 2013. Randle’s duties as a Home Service Consultant were to receive telephone calls from potential customers, sell them new services, and set up their accounts. Randle received pay on an hourly basis as well as a commission based on her sales. She received supervision from her team lead, Crystal Johnson, who reported to Victor Moore, the Floor Manager.

Randle argues that AllConnect managed to avoid paying Home Service Consultants for all of the hours worked per week by having a policy that required them to work off of the clock to complete their sales calls. Randle’s supervisor would direct to log off of the company’s telephone system (and timekeeping system) at the end of her shift, but still direct calls to her so that she was required to continue working. In a typical week, Randle claims that she worked three to five hours off of the clock. In January 2014, Randle finally filed a claim, seeking to represent current and former Home Service Consultants from AllConnect’s Atlanta-based call center within the last three years who were not paid overtime for their off-the-clock work. She then moved to have AllConnect produce the names and addresses of potential class members. AllConnect motioned that it did not oppose conditional class certification.

Federal Court in Tennessee Allows Racial Discrimination Case to Move Forward

June 4, 2014 | Parks, Chesin & Walbert

A federal court in Tennessee granted in part and denied in part an employer’s motion for summary judgment in a case involving racial discrimination and unpaid wages.

In Davis v. FedEx Corporate Services, Inc., Rosie Davis was an African American who began working for FedEx in 1989. Beginning in 2003, she began working as a Marketing Coordinator, considered to be a nonexempt position, which means that she was entitled to overtime pay for hours exceeding eight in one day, or 40 per week. However, Davis believed that she was performing the duties of an Associate Marketing Specialist, an exempt position with higher pay.

Davis made a complaint in 2010 that she was working “out of class,” and her coworkers testified that she had performed significant managerial tasks, including training numerous colleagues and conducting meetings. FedEx then performed a job reclassification audit, which included an interview with Davis, review of her performance appraisals, and discussion with her supervisor. Davis detailed the extent of her job duties, and the investigator appeared surprised by the scope. Even so, Davis learned later that month that her job would not receive a reclassification because her work was primarily administrative. The conclusions were based on findings that Davis had never run a meeting and her statements were highly exaggerated.

Federal Judge in Georgia Denies Conditional Class Certification in Unpaid Overtime Case

May 24, 2014 | Parks, Chesin & Walbert

A federal judge in Georgia recently denied a plaintiff’s motion for conditional certification of a class-action lawsuit over wage and hour violations.

In Wallace v. Norcross Associates, LLC, the plaintiffs sought unpaid overtime wages under the federal Fair Labor Standards Act (FLSA). Alvina Wallace and the other litigants were sales associates or sales representatives employed by Norcross Associates, a telemarketing business that sold long-term telephone service contracts for providers like Verizon. During their employment, Wallace and the others worked on various sales campaigns geared toward business and residential customers. In return, they received payment along several different compensation schemes, including hourly pay, hourly pay and commissions, commissions only, commissions with $10 per hour recoverable draw, and an increasing hourly rate based on the total number of products and services sold.

Under these schemes, Wallace was employed from April 2007 until March 2012, during which time she was compensated at an hourly rate, an hourly rate plus commissions, and commissions only with a $10 per hour recoverable draw. Other litigants were paid on a commissions-only basis with a $10 per hour recoverable draw or an hourly basis plus commissions. All involved claimed that they regularly worked more than 40 hours per week but were never paid overtime. They also argued that their employer never paid them all of the commissions that they earned. Their employer, for its part, claimed that it had paid the litigants for all of their time. Nonetheless, Wallace and the other litigants sought FLSA section 216(b) class status.

Federal Court in Georgia Denies Motion to Dismiss in Wage and Hour, Sexual Harassment Lawsuit

May 17, 2014 | Parks, Chesin & Walbert

A federal court in Georgia recently denied a motion to dismiss in a case where an employee alleged wage and hour violations and sexual harassment.

In Malphurs v. Cooling Tower Systems, Inc., Amanda Malphurs worked at Cooling Tower Systems in an hourly position from November 2011 to May 2012. Her duties included working in her employer’s warehouse, posting cooling tower lines and other equipment for sale on an auction website, and doing other office work. During this time, Malphurs was allegedly denied overtime compensation for her work beyond eight hours in the day. At the same time, she was allegedly exposed to “frequent, ongoing, and continuous harassing conduct of a sexual nature” by Joe Coates, the sole owner of Cooling Tower Systems. He would require Malphurs to work long hours late into the day allegedly so they could be alone, and when Malphurs requested overtime pay, he refused to compensate her unless she acquiesced to his sexual demands.

Malphurs frequently asked Coates to stop his harassment, but Coates ignored her. As he was her sole boss, she could not turn to anyone else to discipline or terminate him. Finally, unable to cope with the situation any further, Malphurs quit.

Waiving Overtime Rights

January 2, 2013 | Parks, Chesin & Walbert

While a 40 hour workweek is considered standard practice in the United States, many employees often go above and beyond the call of duty in an effort to meet deadlines, make a positive impression, or get ahead. According to the Fair Labor Standards Act (FLSA), employers are obligated to provide overtime pay for employees that work an excess of 40 hours in a workweek. This right to overtime pay cannot be waived through any announcement made by the employer or by any agreement made between the employer and employee.

Overtime and the Fluctuating Workweek

July 18, 2012 | Parks, Chesin & Walbert

Under the Fair Labor Standards Act, nonexempt employees are entitled to overtime at a rate of one and one-half times their regular hourly rate for hours worked in excess of 40 per week. However, it is possible for a nonexempt employee to be paid on a “salary” basis, in which case the employee may receive only one-half times the regular rate for hours worked in excess of 40 per week. This method is called the “fluctuating workweek” (or “flex-pay”) method of calculating overtime (though sometimes it is unfortunately referred to as “Chinese Overtime”). The premise of flex-pay is fairly straightforward: because a nonexempt employee received a salary as compensation for all hours worked, the employee has already been paid all wages at the regular rate for all hours worked, including hours worked over 40. Accordingly, only the additional half-time overtime rate is owed for hours worked over 40. Flex-pay gets its name(s) because, when an employee is paid on a salary basis, the regular rate will fluctuate based on the number of hours worked. Notably, the more hours an employee works, the lower the regular rate (and the overtime rate) will go. Consider the following examples:

Salaried employees don’t get overtime, right?

June 12, 2012 | Parks, Chesin & Walbert

It is a common misconception among employers that simply paying a salary avoids the burden of paying overtime wages. Failing to properly classify salaried employees can have devastating consequences, including liability for unpaid overtime wages for highly compensated employees who routinely work well over 40 hours per week.