Employers often do not like to pay overtime, although they must, and they sometimes come up with creative arrangements not to do so.  That is fine, until an employee, often one who has been fired, files a lawsuit. Then, the company must resolve the lawsuit and fix the “problem” going forward.  A recent example of this model just occurred involving a portable toilet company, involving almost 1,300 toilet technicians. The case is entitled Vargas v. Howard and was filed in federal court in the Southern District of New York.

The parties have agreed on a settlement of the action and have requested that the Court give approval to their deal. The settlement will apply to 96 opt-in plaintiffs and a certified class of more than 1,275 portable-toilet service technicians. Under the settlement, the company will put $7.14 million into a settlement fund for payments to the workers, their attorney fees, service awards and administrative costs. The lawyers will ask for one-third of the settlement fund for their fees.

The employees were pump truck drivers, flatbed truck drivers and water truck drivers. They contended that they were only paid their regular rate for the first 10 hours they worked from Monday to Thursday, although they claimed they worked longer hours on many occasions. They also claimed that they only received overtime pay for the first 10 hours if they worked a fifth day.  They also claimed that they worked through lunch hours, although that time was deducted from their pay.  They also claimed that they had to work after their shifts ended without being paid.

The Company had faced this issue before but only with individual employees. The Company settled these cases and probably treated these incidents as a cost of doing business. Now, that a class action has ensued and been settled, and everyone knows about it, the Company must change the way it comports itself and pay overtime in accord with the law.

The Takeaway

Creative arrangements with employees on overtime compensation are one thing and sometimes such arrangements may continue for years without any problems or issues. However, it only takes a single fired or disgruntled employee, or ex-employee, to start a lawsuit or file a complaint with a DOL and then, perhaps, the ball of wax unravels.  The Company had settled with individual plaintiffs and treated those settlements, most likely, as a cost of doing business.

Well, the cost of business, and price of poker, just went up…