BLOGS: Fair Labor Standards Act Law

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Wednesday, May 28, 2008, 5:28 PM

No Charity for the Salvation Army

A former employee of the Salvation Army has filed a lawsuit against the charitable organization alleging that she was required to work off-the-clock during her eight-month tenure as a store manager and assistant store manager for the organization. Plaintiff Diana Mullins filed the lawsuit in the United States District Court for the Northern District of Ohio stating claims that the Salvation Army violated the FLSA and the Ohio Minimum Fair Wage Standards Act by requiring non-exempt store managers and assistant store managers at eight locations throughout Ohio to continue working after they clocked out. Mullins alleges that she regularly worked 50 to 60 hours per week, but was only paid for 40 hours of work. The complaint also alleges that due to such practice, the Salvation Army violated the record keeping provisions of both statutes. While Mullins is unsure of the potential size of the class, she estimates that it would be comprised of approximately 20 former and current store managers and assistant managers.

Tuesday, May 27, 2008, 9:33 AM

That's a No-No! Employers Beware of Conditioning Severance Benefits on Waiver of FLSA Claims!

In this age of numerous class or collective actions pending against large employers for alleged FLSA violations and increasingly poor economic outlooks, layoffs and reductions in force may become a bit trickier in the standard documents and releases required to be executed by employees being terminated. The courts are ever suspicious of attempts by employers to avoid potential liabilities through coercive tactics, such as conditioning severance benefits on execution of a release of all potential claims against the employer, including wage-and-hour claims. courts know that employees already facing economic hardship through a RIF are likely to consent to just about anything so as to get additional compensation when future compensation is uncertain at best. The waiver of FLSA claims must be approved by a court or the Department of Labor to be effective. See 29 C.F.R. § 825.220(d).

The United States District Court for the Northern District of Georgia enjoined SunTrust Banks, Inc. from this practice earlier this spring and similar rulings should be expected by employers and employees alike. See Allen v. SunTrust Banks, Inc., No. 1:06-CV-3075, 2008 WL 1925082 (N.D. Ga. April 30, 2008). For the order conditionally certifying the Allen class and the notice related to the Allen lawsuit, click here. The interesting aspect of the SunTrust Banks case was that of the 178 offered severance benefits, 21 had pending FLSA claims as class members. A court's decision may differ if laid off employees have not opted in yet, are merely potential class members of an uncertified class, as opposed to actual class members. This developing area of law should be watched.

Wednesday, May 21, 2008, 11:11 AM

Sun Burn: Technical Writers’ Class Action Certified Against Sun Microsystems

A class action against Sun Microsystems has been certified in California. According to news reports, the case was filed by a former technical writer for the company who claims that she, and others similarly situated, were improperly classified as exempt computer professionals. The plaintiff’s attorney has said the potential back pay damages could exceed $20 Million.

Tuesday, May 20, 2008, 2:24 PM

Checking Out at Curbside

What began as litigation against American Airlines in Boston (DiFiore v. American Airlines, Inc., 1:07-CV-10070, D.Mass.) has mushroomed into multiple filings, "curative" legislation, and now new lawsuits in North Carolina. Don DiFiore and nine other skycaps sued American on December 20, 2006, claiming that American and their direct employer, G2 Secure Staff, had implemented a $2-per-passenger "service charge" which was not passed on to the skycaps, thereby cutting their take-home pay significantly. Plaintiffs contended this practice violated the Massachusetts Tips Law because passengers were not informed that these charges were not shared with the skycaps; as a consequence of the service charge, voluntary tips declined, which plaintiffs attributed to the alleged lack of notice to the traveling public. Last month, a federal jury determined that American was liable for both the Tips Law infractions and tortious interference with contract, awarding in excess of $325,000 to nine of the plaintiffs whose work had been at Logan in Boston. the tenth plaintiff, who was based in St. Louis, lost.

Meanwhile, Massachusetts amended its wage-hour law to provide for treble damages for violations occurring after June 13, 2008. The same law firm which represented the DiFiore plaintiffs had filed two more suits in the same court (Mitchell v. US Airways Inc., 1:08-CV-10629 (filed 4/11/08) and Travers v. JetBlue Airways Corporation, 1:08-CV-10730 (filed 4/30/08)). Additionally, American instituted a no-tipping policy on May 1, which the original plaintiffs have challenged as "retaliatory." A hearing on that motion is now set for May 29.

The dispute next touched down in North Carolina, with the filing of four new cases on May 15 -- Connie Jones and Stacy P. McCrae filed separate class action complaints against American, Delta, United and US Airways along with G2, attacking the same service charge as well as meal break policies and raising both North Carolina and federal wage-hour claims. The complaints appear to be rather hastily prepared; the filed US Airways complaint is stamped "DRAFT" on every page, but the most interesting error appears in the captions. While the complaint against United is correctly specified as filed in the "United States District Court," the other three are designated as "American States District Court," "Delta States District Court," and "US Air States District Court," respectively.

Plaintiffs' counsel told EmploymentLaw 360 that "the airlines' policies regarding service charges and meal breaks were industrywide practices, and he expected similar lawsuits to be filed nationwide." We will see whether this litigation gets off the ground; watch your monitor for developments.

Click here to read more from Employment Law360 (subscription required)...

Read a related story in the Raleigh News & Observer...

Wednesday, May 14, 2008, 11:35 AM

10th Suit Filed Against Wells Fargo

Wells Fargo Financial, Inc. was sued for the 10th time in the last month alone alleging violations of the Fair Labor Standards Act. Ketrena Kirkland and Gavin Morris filed a lawsuit in the United States District Court of Georgia alleging the company failed to pay them, as well as other similarly situated employees, for overtime in violation of the FLSA.

Kirkland and Morris seek overtime compensation on behalf of anyone who was or is employed by Wells Fargo in the past three years as credit managers, senior credit managers, assistant managers, or loan processors. The proposed class excludes all employees who signed valid and binding arbitration agreements. In the complaint, plaintiffs allege that they routinely worked in excess of 40 hours per week, but were not paid appropriate overtime compensation for the work. The complaint also alleges that the company failed to comply with the recordkeeping provisions of the FLSA.

Other lawsuits making similar allegations have been filed in California, New Jersey, Georgia, Texas, Colorado, Ohio, and Indiana.

To read the case filed by Kirkland and Morris in Georgia, click here.

Tuesday, May 13, 2008, 9:58 AM

Can Welders Fuse Together and Successfully Challenge Nucor's Overtime Practices?

On Friday May 9, 2008, a welder formerly employed by Nucor Corporation ("Nucor") sued the steel manufacturer of steel joists and steel decks over Nucor's overtime practices that allegedly left welders without overtime pay for the hours they worked over 40 hours a week.
According to the complaint, Nucor classified welders as non-exempt and paid them on an hourly basis, but did not pay the welders time-and-a-half for hours worked over 40. To right these wrongs, Elbert Johnson sued Nucor in federal court in Texas, seeking overtime pay, liquidated damages, and attorneys fees on his behalf, as well as all current and former full-time welder employees of Nucor for the prior three years.

It will be interesting to read Nucor's answer to this suit. The FLSA requires that covered, nonexempt workers are paid not less than time and one-half the employee's regular rate for time worked over 40 hours in a workweek. If the allegations of Johnson's complaint are true as to classification and hours worked, then Nucor may face some challenges. The FAQs for FLSA provided by the DOL can be found by clicking here. The Johnson complaint can be accessed by clicking here.

Monday, May 12, 2008, 11:50 AM

The Government Really Is Here to Help You!

Last week the US Department of Labor launched its "FirstStep Recordkeeping, Reporting and Notices elaws Advisor," which is designed to coordinate with DOL's FirstStep Poster and FirstStep Employment Law Overview. As you might imagine, there are lots of details you won't find on their website, but for basic questions, going to the source can be an excellent way to start. See http://www.dol.gov/elaws/firststep. The press release is at http://www.dol.gov/opa/media/press/opa/opa20080251.htm, and the compliance reference site which includes FirstStep is http://www.dol.gov/compliance/news/main.htm. Happy hunting!

Friday, May 9, 2008, 3:02 PM

"Constructive" Discharge Isn't a Good Thing

While constructive criticism has at least some positive connotations, constructive discharge does not. Simply put, the fact that an employee has resigned may not close the book on the right to sue. If the employer has rendered the situation so intolerable that a reasonable, similarly-situated person would feel there was no alternative to quitting, the separation can be deemed involuntary - the equivalent of being fired. Use of the word "reasonable" means that factual analysis is necessary, which also means the court may want a jury to decide the case rather than resolving it on summary judgment.

That's the lesson reinforced in the April 28 decision in Ellis v. Yum! Brands Inc. Yum!, the parent company of KFC, Taco Bell, Pizza Hut, Long John Silver's and A&W, is "the world's largest restaurant company in terms of system units, with more than 33,000 restaurants in more than 100 countries and territories." Kevin Ellis, who was an aviation mechanic for Yum! for almost 22 months, was paid a salary and classified as exempt. When his assigned duties required him to work more than 40 hours in a week, he complained and asked about entitlement to overtime compensation; the company's Director of Aviation reminded Ellis that, as "Aviation Program Manager," he was exempt from overtime entitlement. Undeterred, Ellis continued voicing complaints to his managers, his co-workers , and Yum's Human Resources Manager; the HR Manager told the Director of Aviation that Ellis was "a very negative person."

When his colleagues also began to complain, Ellis "began collecting data to justify adding a position to the aviation department." Not surprisingly, this pursuit of information had a detrimental impact on his job performance: his Individual Development Plan was overdue and logs required by both FAA regulations and company policy were not updated, shortcomings Ellis attributed to both irritation and lack of available time.

Ten days prior to the end of his employment, Ellis met with a US Department of Labor investigator who stated his position that the job was not exempt; Ellis declined to file a formal complaint and decided to take the issue up with his employer. At this time, whether prompted by Ellis' actions or a review of compensation practices accompanying revision of the DOL "white collar" regulations, Yum! was computing backpay exposure if its classification of mechanics were improper. A week after the investigator met with Ellis, the Director of Aviation cancelled a three-week training session Ellis had been scheduled to attend. Two days later, Ellis was summoned to meet with the Director and the Aviation Maintenance Manager. Upon being accused of a "bad attitude," Ellis agreed with the characterization "because of the overtime issues," challenging the company to fix the problem. According to Ellis, he was presented with four options: change his attitude, quit, be fired, or take a severance package. The next day, Ellis resigned. [Note: Yum! disputes many of these "facts," but the court accepted the version Ellis presented for purposes of deciding the motion for summary judgment.]

Ellis filed a complaint with DOL and he, along with seven others, received a back pay settlement payment for the unpaid overtime. Next, he brought suit for retaliatory discharge.

Rejecting the employer's arguments, Judge Charles Simpson of the Western District of Kentucky concluded that Ellis had shown his working conditions to be "objectively intolerable to a reasonable person." Interestingly, it was not the hours worked or the lack of premium pay that created the intolerable conditions; it was the alleged ultimatum -- get over it, get out, or be fired -- preceded by the cancellation of the training session, that tipped the scales. One conversation, and a sparse record including a total absence of investigation of the complaints Ellis made, leave Yum! facing a trial.

DOL Confirms Exempt Administrative Status for Product Technology Application and Marketing Analysts in New Opinion

In an opinion posted today, the Department of Labor clarifies that the FLSA exception for bona fide administrative employees defined in 29 CFR § 541.200(a) includes a "Product Technology Application and Marketing Analyst" ("PTA") based on the employer's representations about the job duties and responsibilities of a PTA.

A PTA's primary responsibility is product quality control through working with an engineering/ design division to develop proper tests of the functionality of new products and potential new uses for existing products. Other responsibilities of the PTA include (1) educating the employer's sales staff on customer inquires about product performance and testing, and (2) performing tests and preparing reports of test results. The PTA's responsibilities include the exercise of discretion and independent judgment in furtherance of the company's business. All of these factors confirmed the appropriateness of PTAs being identified as exempt administrative employees under the FLSA.

To read the newest opinion by the DOL, click here.

Tuesday, May 6, 2008, 3:21 PM

Another Wage and Hour Case in Bankruptcy Court

Early casualties in the mortgage loan catastrophe, Delta Financial and three of its subsidiaries filed for Chapter 11 bankruptcy protection. Now former loan officers of Fidelity Mortgage Inc. sued Delta Financial, the parent company of Fidelity Mortgage Inc., for alleged overtime violations under the FLSA and state laws. The same allegations were previously made against Fidelity and Delta prior to the bankruptcy filing, one filed in the U.S. District Court for the Western District of Pennsylvania in November 2004 and the other filed in the U.S. District Court for the Eastern District of New York in August 2007. The new complaint is intended to include employees eligible to participate in either of the prior suits, as well as others who joined neither suit. The allegations follow past cases in alleging intentional misclassification to avoid overtime pay of its loan officers. Once again, we will have a chance to follow whether wage and hour suits can survive a filing for bankruptcy.

Click here for the complaint filed against Delta Financial.
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