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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