I have posted numerous times about the dangers of (and the escalation of lawsuits) involving claims of off-the-clock work. Well, here we have yet another example.  A $450,000 settlement has now been approved in a case in which admissions representatives at a chain of cosmetology schools claim they were required, under an unwritten policy, to work off the clock without pay.  The case is entitled Le et al. v. Regency Corp. et al and was filed in federal court in Minnesota.

The five named plaintiffs and twenty opt-ins will receive payments that range from $199-$28,605, but the lawyers will get the lion’s share of the settlement, the sum of $238,000.  This highlights one of the ironies in cases involving fee-shifting statutes—the plaintiffs get basically very little and the lawyers get a great deal.

The lawsuit was filed in February 2013.  The five named plaintiffs alleged that the company paid them a salary to avoid treating them as “hourly” employees punching a time clock until December 2010.  The company contended they had been deemed hourly since February 2010 and overtime eligible for any off-schedule overtime hours the employees reported.

Not so, shot back the plaintiffs.  They alleged that they were nevertheless compelled to work through lunches and perform work before/after their shifts and not report that working time pursuant to the direct orders of their supervisors. The Court granted class certification in July 2013, finding that the small number of employees in the class, i.e. 155, as well as the fact that they all worked in the admissions department at company headquarters, supported their theory that they were all subjected to the same company policies, which is the necessary hallmark of a bona fide collective/class action.

The Takeaway

If employers think that simply paying employees a “salary” makes them exempt from overtime, they are mistaken.  Here, the employer evidently realized that but then neglected (unintentionally or otherwise) to pay employees for preliminary or postliminary work and allegedly ordered the workers not to report.  If the pre-shift work was connected to the main job, it will be (likely) compensable working time.  If there is employer compulsion for an early reporting, or worse, as here, employer directives to work and not report the time, that makes it worse.