BLOGS: Fair Labor Standards Act Law

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Thursday, November 29, 2007, 10:16 AM

Another Accounting Firm Hit with Overtime Suit

This month another accounting firm faces an overtime challenge, albeit on state law grounds. The fifth largest accounting firm in the United States, BDO Seidman, has had a class action complaint filed against it alleging past and present associate accountants are misclassified as exempt under California law. California law requires that exempt employees exercise or be able to exercise "independent discretion and judgment," but the lawsuit claims the associate accountants are so highly supervised and controlled by licensed accountants that they are not exempt. The case is entitled Nguyen v. B.D.O. Seidman, Case Number SACV07 1252, in the Central District of California.

BDO Seidman joins fellow accounting firms PriceWaterhouse Coopers, Ernst & Young, KPMG, and Delloite & Touche as defendants in overtime cases challenging the classification of accounting associates. The complaint echoes the importance of employers properly classifying employees based on primary duty and any applicable test under the FLSA or state law.

For more on this suit, click here to read the Employment Law 360 article.

Tuesday, November 27, 2007, 2:13 PM

Supreme Court Denies Cert in Trucker Overtime Pay Case

Yesterday, the U.S. Supreme Court declined to review a March 2007 Washington Supreme Court ruling that upheld a trial court's decision that under state law, truck driver Larie Bostain was entitled to overtime pay for all hours he drove, regardless of whether the hours were logged driving in or outside of Washington State. The state opinion in Food Express Inc. v. Bostain, can be read by clicking here. While not based on the FLSA, the case is a good analysis of common overtime laws as applicable to the transportation industry.

Mr. Bostain's case is interesting. Although he worked more than 40 hours a week, he rarely worked more than 40 hours a week within Washington State. The Washington Supreme Court was persuaded to find that state law applied to Bostain because the state law did not distinguish between hours spent driving in the state versus outside the state, and the law clearly required overtime pay for interstate drivers. However, Bostain was told on hire that he would not be receiving overtime pay by Food Express, and true to its word, Food Express never paid overtime to Mr. Bostain. Bostain was employed to work out of the Vancouver, Washington terminal, drove under a Washington driver's license, drove a percentage of his time in Washington, collected paychecks and turned in time cards at the Vancouver terminal. These facts and others were sufficient to trigger the protections of Washington law.

Travel time itself, independent of the trucking or transportation industry, is a potential pitfall for employers. How travel time is categorized determines whether that time is to be considered "work hours" and therefore subject to overtime as appropriate. Generally, travel may be divided in to (A) Commuting between home and work (not ordinarily considered work time, but may be if spent working or other factors exist that render this time as part of the employee's job duties); (B) Travel during a work day (considered work time when spent on job or required to travel for work); and, (C) Travel away from home "after hours" (depends on the circumstances).

Sadly with the denial of cert, we won't hear any new advice from the U.S. Supreme Court on this point just yet.

Tuesday, November 20, 2007, 10:24 AM

Radio Shack Settlement Distribution On the Horizon

Just in time for the holidays, store managers of Radio Shack and part of several class and collective actions may soon be receiving distributions from the $8.8 million settlement. In the past, the plaintiffs' law firm, Callahan, McClune & Willis, has claimed that there are 4,000 plaintiffs in the class. The real winner in this settlement is the plaintiffs' law firm who will receive over $3.4 million in fees and $1.3 million for out-of-pocket expenses. The remainder, a little over $4 million, will be distributed to class members and class representatives.

This litigation offers guidance to other employers on retail employee's primary duties. A September 2005 decision in the litigation held that store managers who did not supervise at least 80 hours of subordinate time for at least 80% of a workweek did not satisfy the "exempt" standard. The managers had estimated 80% of their time was spent on non managerial tasks. The court stated that the percentage of time spent on activities was important, but it was not controlling. Unlike other cases involving retail store managers and in large part based on language in their managers manual, Radio Shack arguably had selling its products, versus management, as the primary duty of its store managers. This allowed the court to determine the store managers were not "exempt" and were entitled to overtime.

To read more on this settlement from Employment Law 360, click here.

Friday, November 16, 2007, 10:44 AM

How much is enough? Employers get some leeway with classification in the Sixth Circuit

With many recent cases questioning employer's classification of certain employees as "exempt" under the FLSA and therefore not eligible for overtime, re-examining the rules is important. Recently, the Sixth Circuit analyzed the duties of a store manager for a Speedway gas station/convenience store in the case of Thomas v. Speedway SuperAmerica, LLC, No. 06-3768 (October 30, 2007). Ms. Thomas was terminated several years ago, and shortly thereafter, she sued Speedway asserting that Speedway had failed to pay her overtime under the FLSA & under Ohio state law, as well as discriminating against her for her age and wrongfully discharging her under Ohio law. Ms. Thomas moved to has the FLSA claim designated a collective action and the state overtime class as a class action, which was conditionally approved by the court a year after suit was initially brought. Speedway moved for summary judgment on the overtime claims, while Ms. Thomas sought leave to amend her complaint to include 28 other store managers at Speedway locations to the suit. The court granted summary judgment to Speedway dismissing all of Ms. Thomas' claims and did not rule on her request for leave to amend. Ms. Thomas appealed the court's ruling to the Sixth Circuit solely as to the overtime claims.

The Sixth Circuit found that Ms. Thomas' primary duty was management of the station, following "numerous" other courts in determining plaintiffs involved in factually similar cases were primarily management. The Sixth Circuit was influenced by the definition of "management" in the FLSA regulations and clarified that "primary duty" is not necessarily the "most time-consuming duty" rather the most important duty of the employee. So even though Ms. Thomas only spent 40% of her time on management, management was her most important duty and allowed her to be classified as "exempt." See Opinion at p.6. The court went through a substantial analysis of Ms. Thomas' duties to determine what her primary duty was and whether she was properly classified as "exempt." The opinion gives attorneys and employers insight in the how classifications of employees will be assessed.

The guidelines for determining if an employee is "exempt" under the FLSA are found at Part 541 of Title 29 of the CFR. These regulations clarify that a job title alone will not establish that an employee is "exempt;" rather, a case-by-case, factual determination must be made after assessing the employee's salary and his or her duties on the job. In light of this decision, employers should carefully assess employee's primary duties, as well as allocation of duties, to determine exempt status.

Wednesday, November 7, 2007, 11:17 AM

Big Settlements and New Suits: Wage and Hour Woes for Companies Continue

This week, Staples Inc. announced settlement of a class action that alleged the chain had misclassified assistant store managers as exempt from overtime pay. The settlement, a whooping $38 million, is a total payout settlement, and may be one of the largest obtained in a retail misclassification suit in California. The class included between 1,500 to 2,000 employees from a 12-year period.

Staples has been hit with multiple wage and hour suits over the years. Last year, Staples had settled with a class of general managers for $3.875 million, which like the recently announced settlement included interest and attorneys fees.

The recently settled class action alleged that Staples' retail model and policies pressured the assistant managers to not approve overtime for nonexempt workers leaving the assistant managers with no other choice but to work the overtime hours themselves. The assistant managers wound up spending half of their time performing duties of nonexempt employees. The assistant managers were paid a set salary regardless of the hours they worked.

This case cautions employers to consider allocation - the amount of time an employee who is classified as exempt typically devotes to non-managerial or supervisory duties. If an employee spends a significant amount of his or her day performing non-managerial tasks for an extended period of time, an employer may wish to re-evaluate that employees designation as exempt.

To read Employment 360's summary of this news, click here.

In addition to the Staples' settlement, several new FLSA suits of note were recently filed. W-H Energy Services and its subsidiary Coil Tubing Services have been served with a class action suit by employees claiming they were misclassified as exempt while working 105 hours per week. These employees, all service employees (techs, coil operators, among others), have alleged that their jobs should not have been classified as exempt because they had no managerial or supervisory duties. The case may present issues of numerosity if enough potential plaintiffs do not come forward, which is identified as a possibility by counsel given the relative size of Coil Tubing Services. The case illustrates the vulnerability of service companies in their classification of workers, especially when substantial hours are worked on a weekly basis.

To read the complaint in this new suit against W-H Energy Services, click here.
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