Pepsi sued for paying Chinese Overtime to its workers.

 

Pepsi Beverages Company has recently joined a long list of employers who are being sued for paying what some employee’s refer to as “Chinese Overtime.” Yes, it’s not the best name for it. The proper name is Fluctuating Work Week overtime. Some refer to it as “half time” overtime. Whatever you call it, employee’s don’t like it and there are lawsuits all over the country challenging its use.

Usually, employers pay an hourly wage to their non-exempt workers and then pay one and one half that wage when they work overtime. For example, if someone makes $20 per hour, they get $30 per hour for overtime.

Well, in an ongoing effort by employers to save every nickel they can, they are now paying overtime pursuant to a rare and, many say unfair method.

They pay a salary to their employees, then, when they work say 50 hours, they divide that salary by 50 (not 40) to determine the hourly rate. They then pay ½ that rate for the overtime. For someone earning $800 per week, this means getting $80 for ten hours of overtime instead of $300.

Unfortunately, the U.S. Department of Labor allows this payment scheme but only in certain circumstances. Employees and their lawyers around the country are attacking this rule whenever they find a way.

The latest employer to use this method is Pepsi. Stephen Boyd has filed a lawsuit in the federal court in Massachusetts claiming that Pepsi is not following all the rules and therefore should not be allowed to pay ½ overtime. His lawsuit explains it all.

While the claims arise out of a collective bargaining agreement of a local union, it could be that Pepsi pays all of its BCRs this way. If so, BCRs from around the country might be able to join.

Pepsi sued for paying Chinese Overtime to its workers.

Pepsi  Beverages Company has recently joined a long list of employers who are being sued for paying what some employee’s refer to as “Chinese Overtime.”  Yes, it’s not the best name for it.  The proper name is Fluctuating Work Week overtime.  Some refer to it as “half time” overtime.  Whatever you call it, employee’s don’t like it and there are lawsuits all over the country challenging its use.

Usually, employers pay an hourly wage to their non-exempt workers and then pay one and one half that wage when they work overtime.  For example, if someone makes $20 per hour, they get $30 per hour for overtime.

Well, in an ongoing effort by employers to save every nickel they can, they are now paying overtime pursuant to a rare and, many say unfair method.

They pay a salary to their employees, then, when they work say 50 hours, they divide that salary by 50 (not 40) to determine the hourly rate.  They then pay ½ that rate for the overtime.  For someone earning $800 per week, this means getting $80 for ten hours of overtime instead of $300.

Unfortunately, the U.S. Department of Labor allows this payment scheme but only in certain circumstances.  Employees and their lawyers around the country are attacking this rule whenever they find a way.

The latest employer to use this method is Pepsi.  Stephen Boyd has filed a lawsuit in the federal court in Massachusetts claiming that Pepsi is not following all the rules and therefore should not be allowed to pay ½ overtime.  His lawsuit explains it all.

While the claims arise out of a collective bargaining agreement of a local union, it could be that Pepsi pays all of its BCRs this way.  If so, BCRs from around the country might be able to join.  

Pepsi sued for paying Chinese Overtime to its BCRs.

Pepsi  Beverages Company has recently joined a long list of employers who are being sued for paying what some employee’s refer to as “Chinese Overtime.”  Yes, it’s not the best name for it.  The proper name is Fluctuating Work Week overtime.  Some refer to it as “half time” overtime.  Whatever you call it, employee’s don’t like it and there are lawsuits all over the country challenging its use.

Usually, employers pay an hourly wage to their non-exempt workers and then pay one and one half that wage when they work overtime.  For example, if someone makes $20 per hour, they get $30 per hour for overtime.

Well, in an ongoing effort by employers to save every nickel they can, they are now paying overtime pursuant to a rare and, many say unfair method.

They pay a salary to their employees, then, when they work say 50 hours, they divide that salary by 50 (not 40) to determine the hourly rate.  They then pay ½ that rate for the overtime.  For someone earning $800 per week, this means getting $80 for ten hours of overtime instead of $300.

Unfortunately, the U.S. Department of Labor allows this payment scheme but only in certain circumstances.  Employees and their lawyers around the country are attacking this rule whenever they find a way.

The latest employer to use this method is Pepsi.  Stephen Boyd, a BCR, or Bulk Customer Representative, has filed a lawsuit in the federal court in Massachusetts claiming that Pepsi is not following all the rules and therefore should not be allowed to pay ½ overtime.  His lawsuit claims unpaid overtime wages for himself and other BCRs.

While the claims arise out of a collective bargaining agreement of a local union, it could be that Pepsi pays all of its BCRs this way.  If so, BCRs from around the country might be able to join.  

McJobs Are Not The Answer!

First, the good news. The Bureau of Labor Statistics is reporting the creation of 288,000 new jobs in April. This is about 63,000 more jobs than people were anticipating. As a result, the unemployment rate fell to 6.3%, the lowest rate since September, 2008.

Now, the bad news. Most of these new jobs are low-wage “McJobs.” According to the National Employment Law Project, there are nearly two million fewer jobs in mid- and higher-wage industries than there were before the recession took hold, while there are 1.85 million more jobs in lower-wage industries. This means that more Americans are working for pittance wages, in jobs where they are more likely to suffer from wage theft. Even worse, the difference between what CEOs make and what the average worker makes has skyrocketed. For example, the CEO of McDonald’s makes over $9,200 an hour, while the company advises its workers to apply for food stamps to help make ends meet.

This is why we need to raise the minimum wage (which Senate Republicans have blocked) and strictly enforce the laws against wage theft. That includes suing companies that steal wages from their workers.

***Blog Post written by Attorney Anthony Pantuso***

 

Why are wage / hour class actions important?

Workers’ wages are stagnating at a time when there is more than enough money to pay them fairly. That’s it.

Robert Reich explains this point very well in his recent essay. He observes:

Until the 1980s, corporate CEOs were paid, on average, 30 times what their typical worker was paid. Since then, CEO pay has skyrocketed to 280 times the pay of a typical worker; in big companies, to 354 times.

Meanwhile, over the same thirty-year time span the median American worker has seen no pay increase at all, adjusted for inflation. Even though the pay of male workers continues to outpace that of females, the typical male worker between the ages of 25 and 44 peaked in 1973 and has been dropping ever since. Since 2000, wages of the median male worker across all age brackets has dropped 10 percent, after inflation.

Employers, simply put, have more than enough money to pay workers fairly and are making bundles of cash. They simply don’t want to pay them their fair share for the profits that their work produces. The stock market is higher than ever. CEO salaries are higher than ever, but workers’ wages are flat or down.

Wage and hour class actions are an important tool in the war between employees and employers for fair wages. They make employers obey the wage and hour laws and make them pay millions when they violate them. I asked some defense attorneys recently what was the most feared lawsuit by employers. They all agreed it was wage / hour class actions.

So, let’s keep them coming. Let’s keep fighting for employees’ rights to at least be paid what they earned.

Class Action Representative Plaintiff wins $3 million retaliation case!

Class actions are important tools for employees to fight back against employers who don’t pay wages properly. They can be used to sue for unpaid minimum wages for restaurant workers, unpaid overtime wages and commissions.

Many times, employees are afraid to come forward and serve as a lead representatives because they fear retaliation. If no one ever came forward, no class actions would ever be brought.

Well, there are powerful anti-retaliation laws in this country that protect those who bring lawsuits, including class action lawsuits for unpaid wages. Recently, a jury in Boston awarded $1,000,000 in damages (which could be tripled to $3,000,000) for an employee who brought a class action lawsuit against Flight Services & Systems, Inc..

“The verdict sends such a strong message to companies that you cannot fire employees who make wage complaints,” said Travers’s lawyer, Shannon Liss-Riordan, who also represented Travers in the class-action case. “This verdict is very important to ensuring that the wage laws are enforced.”

The Boston Globe ran a full article on this important ruling.

The take away is that employees who bring class action lawsuits are protected by powerful anti-retaliation laws.

Inside Sales employees: how is overtime calculated?

Recently I wrote about the employees who are considered “inside sales” and when they get overtime pay. How to calculate their overtime pay is also a complicated and controversial matter.

Some employers pay their inside sales staff an hourly wage, plus commissions. In this case, when overtime hours are worked (more than 40 in a week), the commissions must be incorporated into the weekly wage and overtime paid on all of it. The overtime cannot be limited to one and a half times the hourly wage.

Other employers (including Radio Shack, GNC) pay these employees on the “fluctuating work week” method of overtime pay. This formula pays a fixed salary, then calculates overtime by dividing the salary by the total hours worked in the week. This method results in a payment that some refer to as “Chinese Overtime” or “Half Time Overtime” and employees don’t like it. Employers like it for obvious reasons (it costs them less than 1/3 what normal overtime costs).

A question arises whether this method of paying overtime can be used when the employee gets a salary and commissions. Employees’ lawyers say no, since the varying commissions make the weekly pay vary (in violation of the “fixed” weekly salary rule). Employers’ lawyers say yes since the base salary is fixed and commissions aren’t a part of the weekly salary.

I believe that the fluctuating work week method of paying overtime should not be used when the employee is paid commissions in addition to salary. The commissions push the employee to work long hours, since the more they work, the more they sell. This incentive to work long hours is contrary to the idea behind the fluctuating work week since the more you work, the smaller your overtime premiums become. I don’t believe that an employer should be able to pay the cheaper ½ time overtime while simultaneously incentivizing its employees to work long hours. I believe this overtime scheme should be limited to employees whose only non-overtime pay is a fixed weekly salary.

The U.S. Department of Labor wrote, in 2011, that bonuses are “incompatible” with the fluctuating work week method of overtime pay. It wrote that it was against the expansion of this payment scheme:

Finally, while the proper use of the fluctuating workweek method of pay results in an employee being paid time and one-half of the employee’s regular rate for overtime hours, the Department is cognizant that this method of pay results in a regular rate that diminishes as the workweek increases, which may create an incentive to require employees to work long hours. The Department does not believe that it would be appropriate to expand the use of this method of computing overtime pay beyond the scope of the current regulation.

Lawsuits are presently on file in federal courts in Connecticut and Massachusetts placing these issues in front of judges. It will be an interesting year.

Inside Sales Exemption: what are the rules?

Many companies pay their inside sales people a base wage or salary and then pay commissions.  Do these people get overtime pay, too?

Yes, especially in Connecticut.

As usually, we start with the understanding that everyone gets overtime pay and an employer who wants to avoid it must prove that an exemption applies.

There is an exemption for inside sales.  It is quite complex and there are some good sources of information out there.  The US DOL Fact Sheet does a good job explaining the federal exemption.

In Connecticut, the “inside sales” is much stricter and more employee friendly.  This exemption permits an employer to avoid overtime pay to inside sales persons for whom the following is true:

a.     Their sole duty must be to sell a product or service,
b.    Their total weekly pay must be greater than twice the minimum wage for all hours worked,
c.    More than half their pay must be commissions
d.    They must now work more than 54 hours per week.

(the precise language of the law is below)

Connecticut General Statutes Sec. 31-76i (g) any inside salesperson whose sole duty is to sell a product or service (1) whose regular rate of pay is in excess of two times the minimum hourly rate applicable to him under section 31- 58, (2) more than half of whose compensation for a representative period, being not less than one month, represents commissions on goods or services, and (3) who does not work more than fifty-four hours during a work week of seven consecutive calendar days. In determining the proportion of compensation representing commissions, all earnings resulting from the application of a bona fide commission rate shall be deemed commissions on goods or services without regard to whether the computed commissions exceed the draw or guarantee;..

In Connecticut, this law is often violated when someone is given duties other than sales, for example, management work.

The overtime that is paid must include the commissions and not be based simply on the hourly rate.  So, if your hourly rate is $10 and you earned $500 in commissions in a week in which you worked 50 hours, your overtime rate for your ten hours of overtime shouldn’t be just $15 (one and a half times your hourly rate) but should be one and half times $20 (since the $500 divided by 50 hours adds $10 to your base rate).

Massachusetts Family Dollar Store Managers allowed to Sue for Overtime Wages in State Court.

A federal judge ruled recently that a class action against Family Dollar Stores by its Massachusetts Store Managers can return to the Massachusetts state court system where it started. Family Dollar had removed the case to federal court. Lawyers for the Store Managers opposed that removal, and asked the judge to send the case back to the state court system. The judge agreed.
What is the case about?
Store Managers at Family Dollar Stores spend lots of time unloading trucks, stocking shelves and working the cash register. They spend very little time actually managing the store. For these reasons, they’ve sued claiming that their classification as “executives” by Family Dollar is wrong. They disagree that their primary duty is management. Instead, they believe their primary duty is to perform the same hourly work as their stock clerks and sales associates. They work long hours, sometimes 50, 60 or 70 hours per week, with no overtime pay.
Is there precedent?
In 2006, a jury in Alabama awarded a class of over 1,400 store managers back pay. The total award was over $54,000,000. Since then, Family Dollar claims to have “retooled” the position, but store managers around the country disagree. Lawsuits have been brought in many states including Connecticut, Pennsylvania, Missouri and Colorado. In Connecticut, the company’s motion to dismiss the case was denied by the court, leaving it for a jury to decide if the position is mostly hourly or mostly managerial.
What happens next?
Lawyers for the Store Managers first have to defend a recent motion designed at moving the case back to the federal courts. Then, the litigation will proceed. The lawyers will exchange documents and witness’ testimony will be taken. If the case isn’t settled, then a trial will occur.
Can other Store Managers join?
Yes. Class actions are designed to represent the interests of the entire class of store managers in Massachusetts. The plaintiff and his lawyers believe that the decision of whether the store managers are mostly managers or mostly stock clerks/cashiers is a decision that is common to the entire class.

Store Managers are being represented by the law firm of Lichten & Liss-Riordan in Boston and the Hayber Law Firm in Hartford.

 

Are auto damage appraisers entitled to overtime pay?

As an attorney, I fully understand the frustration that comes when we just can’t give a straight answer to a simple question.  The problem is that different judges can rule differently on the same issue.  When that happens (we call that a “split of authority”) things get confusing.

The law regarding auto damage appraisers is a good example.  Some courts have ruled that they get overtime pay and some have ruled that they don’t.

Any historical analysis starts with the U.S. Department of Labor.  Here is what they have said since 1975:

Auto damage appraisers:  Appraisers whose functions are to inspect damaged motor vehicles in order to estimate the cost of the necessary repairs, and who also reach an “agreed” price with the repair shop on the cost of repairs, do not customarily and regularly exercise discretion and independent judgment as required by Reg. 541.2.  Their work consists essentially of the determination of facts, and in making their estimates they are guided primarily by their skill and experience and by written manuals of established labor and material costs.  However, there may be sufficient elements in the job to permit the application of the upset salary rule.

Field Operations Handbook,  Section 22d01.  A federal judge in Connecticut ruled in favor of auto damage appraisers in 1994.  Reich v. AIAC, 902 F.Supp. at 326 (granting judgment for automobile damage appraisers).  Another Connecticut judge ruled in favor of auto damage appraisers in 2007 (Neary v. Metropolitan Prop. & Cas. Ins. Co., 517 F.Supp.2d 606 (D.Conn. 2007).  The Ninth Circuit Court of Appeals wrote this:

Appraisers who merely inspect damaged vehicles to estimate the cost of labor and materials and to reach an agreed price for repairs with the repair shop have not been considered as the type of employees who customarily and regularly exercise discretion and independent judgment. . . .  In making their estimates, they are guided primarily by their skill and experience and by written manuals of established labor and material costs. . . . DOL Wage & Hour Div. Op. Ltr., at 1-2 (Feb. 18, 1963). 

In contrast, an adjuster “investigates the validity and the extent of liability of a claim and negotiates settlement . . . irrespective of whether the claim is one for property damage or for personal injury.”  Id. at 2.  And in 1957, the DOL opined that if adjusters are given “reasonable latitude in carrying on negotiations with the insured, the results of which form the basis of their recommendations, they may be [exempt].”  DOL Wage & Hour Div. Op. Ltr., at 2 (Oct. 24, 1957).  If those adjusters had authority to make settlements, that would be “stronger evidence of their exercise of discretion and independent judgment.”  Id.In re Farmers Ins. Exch., 466 F.3d 853, 861 (9th Cir. 2006).

                Occasionally, courts have ruled that auto damage appraisers are more like adjusters and are exempt.  The Seventh Circuit Court of Appeals ruled in 2008 that Material Damage Appraisers at CC Services were not entitled to overtime wages.  Roe-Midgett v. CC Services, Inc., 512 F.3d 865 (2008).  These workers had settlement authority up to $12,000.  The D.C. Court of Appeals ruled that “auto damage adjusters” at GEICO are not entitled to overtime pay.  Robinson-Smith v. GEICO, .. F.3d. .. (2010).

                The key difference seems to be the extent to which the employee handles total loss claims and negotiates with insureds.  The more total loss and the more negotiation, the more likely courts are to rule that they are exempt adjusters.  On the other hand, the more the employees work is limited to appraising damaged vehicles and following company guidelines, the more likely he is to be non-exempt.