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.
Clarks Companies, N.A., a national shoe retailer, is having its “inside sales” pay plan challenged in court.
Usually, retailers try to save money on salaries by calling their Assistant Managers and Store Managers “executives” and not paying them overtime wages. True executives under the law are not entitled to overtime pay. Retailers sometimes stretch this definition and classify managers as “executives” even though they spend the vast majority of their time unloading trucks and stocking shelves.
In a recently filed federal class action, a new employer practice is being challenged. Clarks Companies, a shoe retailer with stores nationwide, pays its store managers, assistant managers, and full time key holders a very low base salary (from $200 to $300 per week) and commissions and bonuses. This pay scheme cannot comply with the executive exemption, since the salary needs to be at least $455 per week. It is closest to the federal exemption for inside sales persons at a retail establishment.
The lawsuit claims that this compensation plan violates Federal , Connecticut and Massachusetts law. It claims that federal law is violated because the commissions do not equal at least one half of the employees’ total pay. It claims that Connecticut law is violated for many reasons, including that the employees “sole duty” is not simply sales (they also manage). It claims that Massachusetts law is violated because Massachusetts has no such “inside sales” exemption.
If this lawsuit is successful, Clarks will owe back overtime pay to all of its store managers, assistant managers and full time key holders for the past three years.
The plaintiffs are being represented by the Hayber Law Firm, in Hartford, Connecticut.