New Jersey Labor and Employment Lawyer & Attorney : Fox Rothschild LLP Law Firm : Serving Essex County, Sussex County, Roseland, New Jersey

A federal judge has ruled that a class of information technology workers in California was exempt from overtime and has granted the employer summary judgment on the overtime claims.  That this occurred in California is fairly significant as that State has been a breeding ground for numerous class actions, many of them involving computer workers.  What is even more significant is that the federal judge had conditionally certified this class in January as a proper class, but now, upon a motion to de-certify the class, changed her mind.

The workers were database administrators, programmers and analysts, who claimed that their work was primarily "production work" and thus did not qualify for either the executive or administrative exemptions.  The court disagreed, finding that they were not "merely" doing production work but performed operations and functions important to the business operations of the employer, Electronic Data Systems.

The plaintiffs also asserted that they were closely supervised and did not possess or exercise the independent judgment necessary to classify the work as exempt.  The judge agreed that the workers were supervised, but decided that their work did require the utilization of considerable independent judgment and discretion.

I wonder why defendants did not argue that the workers fell under the computer exemption as well.  Even if they were salaried, rather than hourly, these employees, if they performed the requisite computer duties called for by the exemption test, would have nevertheless fit within the administrative and/or professional exemptions.  In any case, it is reassuring to see a federal court delve into the details of the actual job duties of a group of workers, stack those duties up against the (still hard to interpret) regulations governing exemptions and reach a correct conclusion. 

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Workers have filed a serious class action against the cell phone division of AT&T.  The workers, who received overtime pay at first, have claimed that the Company's supervisors changed the data base so employees could not enter more than 40 hours of working time in a week.  Thus, these employees were doing productive work for the Employer, but were working "off the clock."  Naturally, part of the alleged scheme, according to plaintiffs, was that the Company was not keeping accurate records of time worked.

These are dangerous case for an employer, because intentionally telling workers to work off the clock or making it impossible for them to enter additional working time, evidences a willfulness that could easily garner an extra (third year) tacked onto the two-year statute of limitations. It also would mean that any damages secured would, in all likelihood, be doubled (i.e. liquidated damages).

The plaintiffs estimate that 100 people would be involved.  Given that these employees probably earned considerably more than minimum wage, the resulting damages would be geometric

In the industrial world, there is often a great deal of pressure placed on managers (i.e. first level, middle managers) to stay within labor budgets and keep overtime and other personnel costs down.  Maybe this is what gives rise to doing something like this, but there really is no reason to engage in this kind of behavior, for any employer.  There is no defense to the action.  If the  evidence shows that intentional steps were taken to keep employees from accurately recording their actual working time, it becomes almost impossible to maneuver and find a viable defense.

Long story short-don't do it!

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Another financial services industry class action.  It seems like there is one every week.  The same themes predominate.  In this latest JP Morgan suit, the hedge fund accountants are claiming they were improperly classified.  They also claimed  they worked 5-6 days per week and worked many hours more than forty.

The fund accountants were responsible for maintaining hedge fund books and records, preparing financial statements, reviewing materials for audits and assembling reports and special projects.  Whether this work is exempt or not is difficult to tell but if the work at issue was highly standardized, routine work, that was performed according to procedures already in place, then the company could face a real problem.  As the salaries of these employees must be at a fairly "high" level, the damages could be quite significant.

This industry is rife for these lawsuits.  Simply because a person works with numbers, or does accounting-type work does not mean that he is exempt from overtime.  Naturally, if the accountants at issue are CPAs and use their CPA training/education in their work, then this case goes nowhere.

But, if they are more junior type accountants or "staff accountants" and do not possess CPA licenses, then watch out. 

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Food vendors at Fenway Park in Boston have filed a class action against Aramark Sports LLC, their employer, alleging that the company assessed service charges and then did not pay the service charges out to the employees.  The suit also claims improper payment of overtime.

The service charges are added on to anyone buying food at the ballpark.  The workers are paid their hourly wages, but are not given any of the service charge proceeds;  the suit charges that this is "unjust enrichment" to the Company.  The suit also alleges that the Company did not pay wages timely, did not properly calculate overtime and docked employees for breaks they did not take.

The suit was filed in state court, but the Company lawyers have sought to remove it to federal court, based on the theory that this suit is preempted by federal labor law, meaning that the suit is based on interpretations of labor contracts and therefore should not be in a court.  The Company also maintains that as the suit would seek to include more than 100 people, the Class Action Fairness Act of 2005 mandates that the action be heard in federal court.  This fairly new law provides that federal courts have jurisdiction over any class action that involves more than 100 workers and the alleged amount at issue exceeds $5,000,000 must be brought in federal court. 

There have been a number of these service charge/tip cases working their way through the courts.  The recent Starbucks case, that I reported on a few weeks ago, involved similar allegations.  Where a service charge assessed to customers is advertised by the Company (or restaurant) as a "gratuity" or where the company indicates that these service charges will be distributed to employees and they are not, that forms the basis for a lawsuit (and bad employee relations).

Change up or fast ball?  We'll see.

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Lawyers for Tyson Foods Inc. have petitioned the United States Supreme Court to hear the case involving the issue of whether "work" must involve some physical exertion.  The Third Circuit Court of Appeals ruled that  the need to put on safety/protective clothing constituted work although no real physical effort was involved.

The Company is contending that this ruling conflicts with a sixty-year old Supreme Court ruling, requiring some exertion by the worker.  Tyson is currently facing more than thirty such class action suits, so the Company has quire a vested interest in taking this case all of the way.

This is a momentous case and the Supreme Court ruling, which may not issue for up to one year, will have a tremendous effect on the world of work.  As the law currently stands, if an activity is integrally related to the primary job function, the time spent engaged in that activity (i.e. donning and duffing clothing) is compensable.  If the Supreme Court ruled that some physical exertion was necessary, that would bode well for employers (and defendants).

I still maintain that the connection between the activity and the work is the key, not whether sweat has to be generated.  We'll all find out. 

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A state court judge in California has ordered Starbucks to pay more than 105 million dollars in back wages to servers and other employees because the tip pool included managers, which is a clear-cut  violation of the law.

There are 120,000 people covered in the case.  The court also ordered injunctive relief, barring Starbucks from continuing to have management-type people taking part in the tip pool.  The court ruled that the supervisors were "agents" of the company and thus could not share in the tip pool.  This sends the clear message that even huge corporations are not above the law.  The Company plans to appeal.  More to follow.

The lesson---this all started from the complaint of a single employee, which then mushroomed into this gigantic debacle.  Every company, restaurant, trucking company, computer software company, whatever, must continually analyze its compensation practices, with an eye towards the special industry that the employer is in and any special rules (state or federal) that apply to that industry/business.

The ever present danger of a single employee starting a nationwide class action is the specter that should scare employers into such analyses. 

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Many times when an employee or group of employees files a FLSA class action, the plaintiffs will file a state action, making the same allegations, i.e. unpaid overtime, but under a state wage-hour statute.  There have been a host of cases exploring the issue of whether these parallel actions can be maintained simultaneously.  The tension is that a FLSA action is an opt-in action, meaning in order to join (whether for the good or bad) the employee must affirmatively opt in.  A "regular" class action, such as those brought under a parallel state statute, are opt out actions, meaning everyone similarly situated (as determined by the court) is in, unless they affirmatively opt out and decide not to be a part of the case.

I believe that dual maintenance of these actions is not proper and such dual actions undermine the validity of the Fair Labor Standards Act and the specific procedures Congress enacted for the enforcement of this federal law.  Many federal judges have agreed.  For example, in Woodard v FedEx Freight East, Inc., decided February 19, 2008, the federal judge in Pennsylvania agreed that a companion state class overtime action to a federal overtime action was the "antithesis" of the FLSA collective action and undermined the FLSA.

The court noted that Congressional intent was to limit the number of participants in such collective actions to people with similar interests.  The prosecution of the companion state action would frustrate that Congressional intent.  The court rejected the argument that dual maintenance was proper as it would facilitate judicial economy and convenience.  Such considerations, ruled the court, cannot override a Congressional mandate.

There have been other courts that have allowed dual suits to go forward in this context.  I believe those courts are dead wrong.  How, for example, would the procedure of identifying class participants be accomplished.  Under a FLSA opt-in process, there is a time limit set for people to opt in and if they do not, they are foreclosed from doing so.  Under the dual maintenance process, this would not matter as those that failed to opt in would, essentially, be in anyway unless they deliberately opted out.  This is too incongruous and contradictory to believe that it could be handled efficiently and it further highlights the contradictions inherent in allowing both actions to continue at once.

I believe this issue will need to be decided by federal appellate courts and/or the United States Supreme Court.  In the interim, the defendant/employer should always make a motion to dismiss the state law overtime claim, as such a motion stands a good chance of succeeding and then all the employer is fighting is federal FLSA claim, which is the more dangerous of the two, all things considered.

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We all know Blackwater as the company that has been given one billion dollars in federal contracts to do work in Iraq.  There have already been numerous allegations concerning the activities of Blackwater agents and their tactics.  Now, it appears that this company may have, on a widespread scale, been violating labor law by classifying individuals as independent contractors when they should have been deemed employees.

Blackwater classified its security guards as independent contractors.  As they were not deemed employees by the company, the company was able to qualify for small business contracts without competing with other qualified bidders.  This is the essence of the allegation made by Congressman Henry Waxman (D-Calif).  The company claimed that it did not sufficiently control the activities of the guards in Iraq and Afghanistan for them to be labeled employees.  Not only does this contradict what a Blackwater lawyer had argued in a wrongful death case, when he was seeking money damages for their estates, it also strikes me as a position without foundation.

In order to establish the element of "control," which then shows someone is an employee, it is not necessary for the putative employer to control every aspect of the individual's work day.  It is enough if a general umbrella of control, actual or potential, exists over the employee(s).  It appears to me, based on the little that is now public, that Blackwater did exercise sufficient general control over these people and its claim that "all" that it did was to pay them seems bland.

At stake are millions of dollars in taxes to the IRS and probably millions of dollars in overtime monies to the employees.  It is very tough to establish a true independent contractor relationship and the framework of these relationships seems to be the antithesis of such a relationship.

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A federal court in California declined to certify a class action under the FLSA, an action that was filed by financial sales representatives of US Bancorp in a case entitled Guess v US Bancorp.  The plaintiffs wanted a nationwide class action, as many of these suits hope for and seek.

In numerous postings, I have observed that the threshhold for obtaining class certification in a FLSA class action is relatively low.  There must be a common policy, plan or practice applicable to all potential, putative class members.  In this case, the employer argued that the job titles and, more importantly, the job duties of the proposed plaintiffs varied tremendously and thus they were not  "similarly situated" for class action purposes.  The court agreed.

The plaintiffs had contended they were misclassified as exempt, were really non-exempt and therefore overtime eligible.  The company argued that it employed 52,000 people nationwide and the job responsibilities differed widely from state to state and division to division.  The key was that the plaintiff failed to make a sufficient showing that the work duties of all other financial services representatives were substantially similar to his.

This gives heart to employers.  These class actions can be defeated if the proper evidence rebutting allegations of "similarity" can be adduced.  The plaintiffs in this case, however, have been given the opportunity to offer additional evidence and re-file the class action motion.  So, maybe, we will hear more of this.  Maybe not.  

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