Office Depot’s Overtime Scheme violates Federal Law!

A federal judge in New Jersey recently ruled that Office Depot’s overtime scheme, modeled after the federal “fluctuating work week” method of overtime pay, violates the federal Fair Labor Standards Act.  I know, you are probably saying, “what does that mean?”  Let me explain.

As most of you know, we have had a law in this country since 1938 that requires overtime pay at “one and a half times the regular rate” to be paid to workers who work more than 40 hours in a week.  Usually, employers assign these “non-exempt” workers a regular hourly rate of pay (say $10 per hour) and then pay them time and a half ($15) for all hours worked beyond 40 in a week.

Few people realize that there is an alternative method of calculating overtime pay called the Fluctuating Work Week method.  It derives from a 1942 U.S. Supreme Court case called Missel.  Some people call it the “half time” overtime method.  Still others call it “Chinese Overtime.” (although I have no idea why).  Here is how it works.

First, the employees have to be paid a fixed weekly salary, say $800 per week.  This salary must be paid even if the employee works less than 40 hours.  So, if the  employee works only 30, she still gets her $800.

Next, when the employee works more than 40, say 50, overtime is calculated by dividing $800 by 50 ($16), then paying hours 41-50 at one and a half times $16 or $24.  Well, since this employee already got $16 for hours 41-50, she is only due another $8 for those hours or an $80 premium.   She will get $880 instead of $1,100 (the amount she’d be paid if her hourly rate was $20).

There are obvious pitfalls to this method for employees.  The most obvious is that if the employee never or rarely works less than 40, she will not receive the benefit of this scheme and only suffer its downside – half time overtime.  Because of this, most employers who use this scheme neglect to tell their employees that they will get their full pay if they work fewer than 40 hours.

The fixed weekly salary component is not only violated if the weekly pay is too little, it is also violated if it is too much.  If an employer pays $850 for our employees work during a holiday week, they’ve paid too much and the weekly salary won’t be “fixed” for FWW purposes.

Judges in Connecticut have been reluctant to allow employers to use this calculation when they mis-classify an employee as exempt.  See Dan Schwartz blog post on this issue.

A federal judge in New Jersey ruled on February 22, 2013 that Office Depot’s overtime scheme, which it was using for its Assistant Managers, violates the Fluctuating Work Week. In that case, Office Depot’s pay scheme paid Holiday pay on national holidays.  The case is called Gibbons v. Office Depot, Inc. and Gibbons is represented by Seth Lesser from New York.

The problem was that if the Assistant Manager worked 40, she got 8 hours of holiday pay for a total of 48.  If she worked 35, she’d be paid 43 (with the 8 hours of Holiday Pay).  If she worked 31, she still get 40 salary, but no holiday pay.

These fluctuations in salary defeated Office Depot’s claim that it paid a “fixed weekly salary.”  The citation is 2013 U.S. Dist. LEXIS 25169.

Another component of the FWW is that the employer must show that its employees had a “clear mutual understanding” of the way overtime would be paid.  The fact that it did not explain this holiday pay system in writing defeated this requirement.

The take away is that the FWW is a strictly construed exception to the normal “hourly” way of paying workers and that courts hold employers’ feet to the fire when employees challenge it. There is already a case pending in Connecticut for assistant managers at Save a Lot Food Stores challenging a similar practice.  If you are an assistant manager paid on this FWW or “coefficient overtime” scheme, you could have a claim.  If you are an attorney litigating this issue, this ruling can help you.  Good luck.

Connecticut Court Certifies Class Action for Assistant Managers at Ocean State Job Lot!

A federal court recently certified a class action for Assistant Managers at Ocean State Job Lot.  That lawsuit was originally brought in 2009 and alleged that Assistant Managers at Ocean State Job Lot were wrongly classified as exempt from overtime pay.  Ocean State claims that their primary duty is management (a prerequisite for the “executive” exemption) but the Assistant Managers disagree.  They claim that they spend the vast majority of their time performing non-management tasks such as stocking shelves and merchandising.

The plaintiffs filed a motion to certify two classes; one for Assistant Managers in Connecticut and another for Assistant Managers in Massachusetts.  The allowed the Connecticut class to proceed but denied the motion as to the Massachusetts Assistant Managers.  Anyone who has been an Assistant Manager at Ocean State Job Lot in Massachusetts is no longer covered by this lawsuit and must take steps immediately to protect their rights.  Their claims for unpaid overtime wages have begun to expire, now that the court denied the motion to certify the Massachusetts class.

The court also denied Ocean State’s motion to decertify the collective action of 25 Assistant Manager who had opted into the case.  They will be allowed to proceed to trial with their claims under the federal Fair Labor Standards Act.

The plaintiffs are represented by the Hayber Law Firm, in Hartford, Connecticut.

This ruling should help assistant managers at other retailers band together and assert claims for unpaid overtime wages.

TD Bank Underwriter Overtime Case Heads to Mediation!

A few weeks ago I wrote about a case that had recently been filed against TD Bank for its loan underwriters.  That lawsuit sought collective action status for a class of loan underwriters at TD Bank locations around the country.  The law that the plaintiffs invoked is called the Fair Labor Standards Act.  It requires that employers pay one and a half times an employee’s regular rate when they work past 40 hours in a week.  The lawsuit follows a ruling from the Second Circuit Court of Appeals, called Davis v. JP Morgan, in which that court ruled that mortgage loan underwriters get overtime pay and are not exempt.

A recent review of the docket shows that TD Bank has agreed to mediation.  Mediation is an informal process where the parties attempt to settle the case.  It is unclear from the court docket whether the mediation will be on behalf of the named plaintiffs only or whether it is for the entire class.  In the meantime, the case was dismissed, but it looks like an agreement has been reached to toll the statute of limitations.  This probably means that those who would be members of the class will not be affected by the dismissal and their claims won’t expire by the passage of time.  Since we haven’t seen the actual agreement, it is impossible to be sure, however, and mortgage underwriters at TD Bank should take whatever steps that they believe are appropriate to protect their rights.

We wish the plaintiffs and their lawyers well.  This is an important case for mortgage loan underwriters and their fight to be paid overtime wages that they deserve.

Family Dollar being sued in State Courts by Store Managers – avoiding the 4th Circuit!

In December 2008, the 11th Circuit affirmed a jury verdict against Family Dollar in the amount of $54,000,000.  That award paid store managers who were misclassified as “executives” and their attorneys.  Family Dollar classified them as “executives” despite the fact that the vast majority of their time was spent performing non-management tasks like stocking shelves and cashiering.   The jury found that these employees were entitled to overtime pay and the 11th circuit agreed.  Morgan v. Family Dollar Stores, Inc.

Rather than reclassify the position, Family Dollar continued its exempt status.  More lawsuits followed, but most of them were consolidated into Family Dollar’s home state of North Carolina via the federal courts MDL (multi district litigation) procedures.  In that court (which is in the 4th circuit) Family Dollar has been having success at getting the store managers’ claims dismissed.

Some plaintiffs have avoided the 4th Circuit by suing in state court.  Presently, there are class action lawsuits in Connecticut, Pennsylvania, Missouri and Colorado.  The court in Missouri recently granted class certification.  The court in Connecticut is about to rule on pending motions.

Anyone employed at Family Dollar as a Store Manager who is working excessive hours and not being paid for overtime should not give up.  Just because one judge in the 4th Circuit is denying claims, does not mean that you are without a forum.  Bring your claim in state court and ask that judge to follow Morgan.  Good luck!

Workers aren’t “bottom feeders.”

I have been representing workers for 20 years.  One of the biggest problems has been teaching workers their rights.  Most people don’t know that they have certain legal rights, like the right to their personnel file, the right to file a rebuttal, the right to be paid overtime wages, and more, the list is very long.  Over the last few years, I have begun to use Facebook as a way of reaching out to people to educate them.  You can’t enforce a right unless you know that you have one.

What I have found has amazed me.  While there are many people who are interested in learning their rights, there are those who side with their employer in almost every case.  Recently, I have added posts to my Facebook page which let people know about pending class actions that might affect them.  If they fit the class definition, they might be entitled to back wages.  In response, several people have reacted negatively.  Some say that lawsuits for overtime wages will end up costing them jobs.  Others say that the company is the one they feel for because they have to defense these lawsuits.

The most recent used the word “bottom feeder.”  It could have been directed at me or it could have been directed at the people who brought and joined the lawsuit.  In any event, I just don’t get it.  Workers have been getting poorer and companies have been getting richer for decades.  The gap between the rich and the poor has never been wider in this country.  Part of the blame falls on employers who continue to violate the Fair Labor Standards Act.  This law was passed in 1938 and protects workers from employers who would work them too hard and too long for too little money.  The general rule is that hours over 40 in a week get paid at time and a half.

Employers try to avoid this rule by classifying employees as “exempt.”  An example is a retail store which calls its Assistant Manager “executives” even though they spend most of their time stocking shelves.  In this way, the company can work these people beyond 40 hours per week for free.

What I don’t understand is the hostility towards these claims by workers.  Workers should be thrilled that lawsuits like these exist.  Those that aren’t have been brainwashed, perhaps by our right wing friends at Fox News, that workers are the reason this economy is in the trouble it is.  (by the way, workers are not to blame, the bankers on Wall Street are!).

I believe that this country rises and falls on the backs of its workers.  Companies can’t survive without their employees, no matter how hard they try.  Workers should be proud of who they are and what they do and they should not hesitate to stand up for their rights when they are violated.  Employers make enough money and shouldn’t be allowed to steal wages from their lowest paid employees.  Workers are the backbone of this country and not, as my Facebook follower stated, bottom feeders.


TD Bank sued for overtime by Loan Underwriters!

In what is a growing trend, another bank has been sued for overtime by its Mortgage Loan Underwriters.  Nneka George and Brian Conzelman have sued TD Bank, N.A. and three other affiliates for unpaid overtime.  They are claiming, consistent with the Second Circuit’s ruling in Davis v. JP Morgan, that they were production workers not administrators.   Generally, if you are performing work that relates to the general business operations of a company, you can be classified as exempt.  In this Circuit, employees whose work relates to the product or service that the company produces, they are not considered exempt.

The case is currently pending in front of Judge Alfred Covello of the United States Court for the District of Connecticut.

The plaintiffs claim to represent a class consisting of all similar positions at TD Bank locations around the country.  They claim that TD Bank not only violated federal law but also the wage laws of the various states, including Connecticut and Pennsylvania where they worked.

The plaintiffs are being represented by the law firm of Garrison, Levin-Epstein, Richardson, Fitzgerald & Pirrotti, P.C. from New Haven, CT.  They are also being represented by Thomas & Solomon, LLP from Rochester, NY.

If they are successful, other mortgage loan underwriters will be permitted to join that suit.  We wish them all luck.

Are insurance underwriters entitled to overtime pay?

We’ve written about mortgage loan underwriters and how the 2d Circuit ruled that they get overtime pay.  But what about insurance underwriters?

There is presently a case pending in the District of Connecticut which makes this claim.  In Graves v. Chubb & Sons, Inc., a former insurance underwriter claims that he was primarily performing non-exempt work and should not have been denied overtime pay.

The only case we’ve found on this topic comes out of Mississippi.  In Edwards v. Audobon Insurance Group, Inc., the Southern District of Mississippi ruled that Edwards’ work as an insurance underwriter was exempt administrative work.  (2004 wl 3119911).

We disagree.  We think that insurance underwriters who primarily process insurance applications and apply underwriting guidelines are product workers, just like Davis was an underwriter at JP Morgan!

We wish good luck to Mr. Graves and his attorneys.  If he wins, perhaps the insurance industry will have to change its ways!