In 2008, BJ’s Wholesale Club was sued for not paying its mid-level managers overtime wages.
The workers alleged that the company was not paying them for their work beyond 40 hours per week even though their main job duties had nothing to do with management, such as standing behind a counter and renewing customers’ memberships.
The case ultimately settled for more than $9 million.
Then in 2012 the company was hit with another class action for not paying overtime to another group of mid-level managers. This time there were fewer plaintiffs and the case settled for $2.7 million.
Now, according to a Hartford employment lawyer, BJ’s Wholesale Club, which has more than 200 locations along the East Coast, is again not adhering to wage and hour laws regarding overtime. Richard Hayber, of the Hayber Law Firm, has recently filed another class action against the company in U.S. District Court in Connecticut. So far he has about 30 clients.
“You’d think BJ’s would have reclassified their mid-managers but they didn’t,” said Hayber. “They’re still working overtime and not getting paid overtime.”
Hayber explained that workers typically exempt from overtime pay are executives and those in administrative positions. Other workers are supposed to be paid time-and-a-half for any work done beyond 40 hours per week.
“Mostly when companies, especially big companies, decide if a specific job category gets overtime or doesn’t get overtime, they do so on a class-wide basis,” said Hayber. “They say, for example, all assistant managers at our chain of grocery stores are considered executives and don’t get OT. If they get it wrong, [employment lawyers] come along and challenge it on a class-wide basis.”
Hayber continued: “Employers have to prove these people’s primary duty is management. If their primary duty is something other than management, like stocking [inventory], it doesn’t deserve the [overtime] exemption and they should be getting overtime.”
Hayber said companies can save a lot of money by not paying overtime to workers who really should be receiving it. Hayber suggested that BJ’s decision to not reclassify its mid-level managers as overtime eligible, even after paying off two previous class action settlements, is evidence that the company may actually save money in the long run by paying off an occasional lawsuit rather than changing overtime policies for thousands of employees.
“When a company classifies all of its assistant managers executive and asks them to work 55 hours a week for $800 a week, they’re getting 15 hours of free labor. That’s extremely valuable,” Hayber said.
BJ’s Wholesale is a membership-only warehouse club chain along the East Coast. It has stores in 15 states with 25,000 full- and part-time employees.
Lawyers from Littler Mendelson in New Haven, Washington, D.C., and Atlanta are defending the Massachusetts-based company in the latest class action. Lori Alexander, of Littler’s New Haven office, filed a brief Feb. 19 arguing that one of the named plaintiffs cannot be a member of the class because he agreed to a company policy that requires such claims to go through arbitration instead. The other named plaintiff had opted out of the company’s arbitration clause.
Alexander, who did not return calls for this article, explains in court documents that BJ’s Wholesale in late 2012 rolled out a new company “dispute resolution process” called “Open Door Solutions.” This program requires all employees to settle employment-related disputes with the company through binding arbitration. However, employees may opt out of the process by sending an e-mail to corporate headquarters, which then sends the workers paperwork to fill out. That paperwork must be returned within 30 days.
One of the named plaintiffs, Galan Newton, did not opt out of the dispute resolution program, so Alexander argues that he and any other future class action participants who did not opt out should not be part of the suit.
Hayber will argue that a clause in the language explaining the Open Door Solutions program permits Newton and others to participate in the class action. He said it reads, “Notwithstanding this section, BJ’s agrees that I am not waiving my right under section seven of the National Labor Relations Act to file or participate in a class or collective action in court.”
Hayber said mandated arbitration clauses, like the one BJ crafted after the second major class action settlement, are becoming a trend among companies nationwide. He said courts, for the most part, have upheld challenges to the agreements.
“Most judges uphold this general idea that consenting adults in the American economy are free to agree with each other on almost anything as long as it’s not illegal, and it’s not illegal to agree to arbitrate your claims,” said Hayber.
Hayber, however, thinks that such policies are one-sided. “They do allow an opt out but they’ve made it hard to do,” said Hayber. “It’s confusing and people are intimidated to e-mail corporate headquarters. The disparity in economic power just results in these companies effectively take away a working person’s right to sue in court.”
Joshua Hawks-Ladds, chair of Pullman & Comley’s Labor, Employment Law and Employee Benefits Department, who is not involved in this case, said disputes over overtime pay are becoming more and more prevalent. “It’s a very hot topic in the employment bar right now,” said Hawks-Ladds. “I don’t see this type of litigation disappearing any time soon.”
Hawks-Ladds said the answer as to whether a given employee is exempt or not from overtime pay isn’t always “black and white” and the end result is sometimes “a coin toss.”
“It does not have to be a pernicious decision by the employer. An employer may argue a group of employees are properly exempt and the plaintiffs’ counsel disagrees and a court has to decide it,” said Hawks- Ladds, who represents employers in labor disputes. “It happens rather frequently.”•