Richard Hayber ()
It seems to be the never-ending battle between employer and employee.
The worker, often called a manager but has very few managerial duties, is made exempt from overtime pay by the company. Eventually, a group of disgruntled workers in the same job contact a lawyer and the matter ends up in court.
Since 2008, two settlements have been reached over worker overtime with BJ’s Wholesale Club: one for $2.8 million and the other for $9 million; with a third similar suit pending in Connecticut. Earlier this month, Berlin limousine company Premier was ordered to pay $500,000 to drivers who weren’t paid the overtime they deserved. The same scenario led to a $2 million settlement with FedEx a few months back.
“Today with the Internet, social media … I believe employees are learning their rights more,” said Richard Hayber, of the Hayber Law Firm in Hartford, an employment law firm specializing in overtime class action lawsuits.
Hayber, who serves as lead or local counsel in the majority of these types of federal class action lawsuits in Connecticut, said such claims were just getting started in the late 1990s. Since then, it’s only increased. Hayber attributes the trend to several factors.
“One is, these are good claims,” said Hayber. “I don’t know who the first lawyers were that did this but as they won rulings other lawyers read about it, followed in their footsteps and they became popular. They’re certainly lucrative or can be if they’re handled efficiently. They also can be costly to attorneys who don’t handle them correctly or lose.”
Hayber said the availability of information online and through advertisements from lawyers about these types of claims have encouraged other potential employees to come forward.
Hayber also opined that the economic meltdown around 2008 also played a role.
“It seems to me that in 2008 when the economy crashed, employers’ bottom lines got hit hard and they perhaps began looking carefully at where they could save money and one of an employers’ variable expenses is payroll,” he said. “It could be that employers are simply skating close to the line more these days because times are tough.”
Perhaps the most egregious case that has impacted Connecticut is the litigation involving BJ’s.
In 2008, the wholesale club was sued for not paying its midlevel 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 midlevel managers. This time there were fewer plaintiffs and the case settled for $2.7 million.
BJ’s, which has more than 200 locations along the East Coast, is again being sued as part of a class action complaint filed in U.S. District Court in Connecticut.
Hayber suggested that BJ’s decision to not reclassify its midlevel 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.
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.
Hayber said a common complaint in these disputes is workers classified as executives exempt from overtime pay but their primary tasks involve such things as stocking shelves and cleaning bathrooms. He said he’s had clients earning $30,000 a year being called managers exempt from overtime pay.
“[Defense] lawyers believe employees can be exempt executives even if 90 percent of the time they’re doing nonexempt work because 100 percent of the time they are in charge of the store,” said Hayber. “We don’t believe it’s enough to be in charge of a store. You mostly have to be performing management duties like job interviews, disciplining someone, reviewing management reports, not stocking shelves or being a cashier.”
In general Hayber said when employees who should be paid overtime work around 45 to 50 hours a week without overtime pay, they don’t typically get upset enough to seek legal recourse.
However, he said 50 to 60 hours without compensation will. He said he’s even had a case where someone was working 80 hours a week on 40-hour salary.
“When you push somebody that far they complain,” said Hayber.
Joshua Hawks-Ladds, chairman of Pullman & Comley’s labor, employment law and employee benefits department, said these overtime issues come up frequently when advising his employer clients. “It’s a hot issue,” he said.
He said whether to designate a class of employees as exempt from overtime is the common dilemma.
“It comes up often in different scenarios. Sometimes it’s a very close call. Sometimes it’s clear,” said Hawks-Ladds.
Hawks-Ladds said many more worker complaints are handled through the Department of Labor than end up in costly class action suits. As such, he said employment lawyers spend a lot of time debating who should be classified as overtime eligible and who shouldn’t be.
“We deal with the Department of Labor from the very beginning of these claims,” said Hawks-Ladds.
Hawks-Ladds said the department will give his client a complaint or audit about a misclassification of employees and that it owes overtime wages. He said the department will submit a bill that is sometimes in the hundreds of thousands of dollars. e then has 21 days to challenge it.
Sometimes the two sides reach an agreement. If not, he said the attorney general handles the case in court.
“The labor lawyers are in the trenches every day on these issues,” said Hawks-Ladds.
Ross Eisenbrey, a lawyer and former commissioner of the U.S. Occupational Safety and Health Review Commission, is vice president of the Economic Policy Institute.
Eisenbrey said many unknowledgeable employers, particularly those lacking a human resources department, simply do not know the laws in the Fair Labor Standards Act and believe that as long as employees earn a salary, they aren’t eligible for overtime. Similarly, he said many workers wrongly believe that because they earn a salary, they aren’t eligible for overtime pay.
Eisenbrey cited statistics that said there were 7,764 claims in U.S. courts in 2013 regarding overtime claims, up 10 percent from 2012. He said in 1990, there were just 1,256. He said the number has quadrupled since 2000.
Eisenbrey also noted that in 2012, wage-and-hour class action claims netted plaintiffs $467 million.
Currently, Eisenbrey said a weekly salary of $455 or less automatically requires overtime pay.
He noted that President Barack Obama has directed the labor department to look into raising the required salary with which people must still receive overtime pay as well. The department has also been directed to consider requiring an increase in the percentage of job duties that are management-related in order for a worker to be classified as exempt from overtime pay.•