California Truckers Win Battle in Bid for Overtime Pay

Several California truckers filed a suit to recover overtime pay and expenses.  But the trucking company argued that the truckers had signed a form contract designating themselves as independent contractors.  Independent contractors are not entitled to overtime pay. 

The truckers lost at first and appealed their case.  The Court of Appeal handed the drivers a victory by holding that the form contract did not matter.  The case is Narayan v. EGL, Inc. and the Labor & Employment Blog has a nice post on the case. 

Genuine independent contractors are not entitled to overtime pay so the key question was whether the drivers were employees or independent contractors.  This is where the form contract came into play.   When the drivers were hired, they each signed a contract that said they were independent contractors and that the laws of Texas would apply to any dispute.   So EGL said that the drivers already agreed that they were not employees and told the California court that the laws of Texas should apply.   

But the California appellate court held that the form contract did not govern these issues.  First, the court held that the laws of California would apply because the drivers worked in California and their claim for benefits did not arise under the contract. 

Second, the court held that the truck drivers were  not necessarily independent contractors just because the form contract said so.  The California Labor Code has a test to determine if a worker is an employee or an independent contractor. The court held that the acknowledgment in the form contract of independent contractor status is "simply not significant under California's test of employment."  Therefore the California test must be applied to determine the drivers status. 

This is a win for employee rights because this decision shows that an employee cannot be forced to waive certain rights in a form contract.  Importantly, employees should not assume that they are independent contractors just because a contract says so.  These employement contracts do not determine an employees real status.  Instead, the California Labor Code governs. 

Why More Employers Get Sued for Overtime Pay Violations

The Wage & Hour blog published by Fox Rothschild reports a sharp rise in overtime pay suits in 2010.   According to the post, overtime pay suits under the Fair Labor Standards Act rose 23% in the second quarter of 2010.

The author of the blog speculates that increase in overtime suits is the result of a conspiracy by plaintiffs lawyers to file more suits, greedy plaintiffs lawyers trying to get rich off of the fee shifting statutes, and the easy burden of proof under the FSLA.   But the author forgot to mention the biggest reason for these lawsuits is the fact that employers do not pay their employees overtime.   

The cause, in my view, is that is makes economic sense for employers not to pay overtime.   Overtime payments can be very expensive and the odds are that most employers will not get caught and even if they do get caught, they can pay later.   So it just makes sense to avoid paying overtime.   This is the real reason for the problem.  But this is nothing new  - this has been going on for decades. What is new is that more employers are now getting caught. 

More employers are getting busted for overtime pay violations because the Obama administration has made wage theft a priority.  The federal government now cares about this issue and it is now easier than ever to win these cases.   But again, the real reason for the suits is the fact that employers are just not paying overtime to their employees. 

Hospital Settles Overtime Pay Suit for 8.5 Million

A Boston based hospital group agreed to settle an overtime pay class action law suit for 8.5 million.   The hospital group was sued by former and current employees who claimed they were not paid for working through lunch and for extra time worked after the end of their shift.   The overtime class action suit alleged that the hospitals had a common practice of not paying its working staff overtime pay.

Non-exempt employees must be paid for the time that they work.   It is a simple concept but companies routinely fail to pay their employees for all of the time worked.   If employees work through lunch or stay late, they must receive overtime pay for these extra hours. 

Common Sense Prevails in Overtime Pay Case

The outcome of an overtime class action involving 2500 employees hinged on the meaning of a word:  salesperson.   The question before the court was simple - does an employee have to sell something in order to be deemed a salesperson?   

The case involved 2500 Novartis employees who sought overtime pay.  Novartis argued that the 2500 employees were not entitled to overtime pay because they were outside salespeople.   Under the Fairl Labor Standards Act, outside salespeople are not entitled to overtime pay.  

The court took a pratical approach and said that an employee cannot be considered an exempt outside salesperson unless they actually sell something.   Makes a lot of sense.   The 2500 employee were called "sales representatives" but a person's title means little in these cases.   After taking a look at what these employees did, the court found that the employees did not sell anything.  

The employees only visited doctors offices and entertained them in order to promote Novartis drugs with the hope that the doctors might prescribe Novartis drugs to their patients. Since there were laws that strictly prohibited the Novartis employeses from actually selling the drug, the court concluded that the Novartis employees were not salespeople.   Also the drugs were sold at drug stores and the employees had nothing to do with these sales.  An employee cannot be deemed an outside salesperson unless they actually sell something.       

New Employee Rights Law Pending in Congress

A new employee rights law was recently submitted to Congress by Senator Sherrod Brown from Ohio.  The Employee Misclassification Prevention Act is intended to protect workers who are misclassified as independent contractors.   It is estimated that tens of thousands of employers routinely misclassify their employees as independent contractors.  

Employees who are misclassified as independent contractors lose critical workplace protections and employee benefits such as overtime pay, minumum wage, unemployment insurance, health and saftey protections and workers compensation.  

The EMPA would reduce the number of misclassification violations by:

•    Ensuring that employers keep records that reflect the accurate status of each worker as an employee or non-employee and clarifying that employers violate the Fair Labor Standards Act when they misclassify workers.
•    Increasing penalties on employers who misclassify their employees and are found to have violated employees' overtime or minimum wage rights.
•    Requiring employers to notify workers of their classification as an employee or non-employee
•    Creating an "employee rights web site" to inform workers about their federal and state wage and hour rights.
•    Providing protections to workers who are discriminated against because they have sought to be accurately classified.

For more information on the EMPA, please the post by the Overtime Advisor

Obama Catches Overtime Pay Violators

Obama Catches Overtime Pay Violators

 

The Obama administration has vowed to protect the average worker.  The U.S. Department of Labor is pursing industries that have notoriously abused workers by not paying them minimum wages or overtime pay.  Here are a few of the companies that have been caught. 

 

Garment Company Caught and Punished

 

A garment company in Los Angeles, Laundry Room Clothing, Inc., was ordered to pay nearly $100,000 in back wages to 53 workers and the company was enjoined from shipping any goods that were made by workers who where deprived of overtime pay or minimum wages. 

 

Gas Station Workers Win in New Jersey

 

In another case, Raceway Petroleum, Inc., a New Jersey gas station operator with 700 employees, was ordered to pay $3.9 million in overtime pay and fines.  Some gas station workers put in more than 100 hours a week and were not paid overtime. 

 

Grocery Store Workers in New York City Recover Overtime Pay

 

A grocery store chain in Queens, New York abused workers by not paying them any wages in some cases, and not paying minimum wages or overtime pay.  A total of 38 workers recovered $288,000 in unpaid wages.   The DOL found that some employees who bagged customers food were not paid at all and instead had to rely on customer tips. 

 

Overtime Pay in a Nutshell

Overtime pay is governed by federal and state law.  The federal law is called the Fair Labor Standards Act (FSLA).  These federal and state laws provide that employees should get overtime pay unless they fall into specific narrow exceptions.  Under these laws, an employee must be paid time-and-a-half (overtime) for each hour worked over 40 in a week.  This rule does not apply to someone who falls into one of the exemptions. 

 

California provides even more overtime pay protection.  If you work in California, you not only get time-and-a-half for each hour worked over 40 in a week, you also get 1.5 times your normal rate for each hour over 8 worked in a day, plus double time for each hour worked over 12 in a work day, an unpaid 30 minute meal break after 5 hours, and a 10-minute rest break every 4 hours.  Those are the basics of overtime pay.  The picture can get murky once you get into all of the exceptions to overtime pay. 

 

Generally, everyone is assumed to be entitled to the overtime pay rules described above.  But, companies are free classify their employees as exempt from these overtime laws if they fit into any of the narrow exemptions.   Companies often try to classify their employees as exempt because then they get more work out of their employees for less.   The problem is that many companies go to far and exempt many workers who really are entitled to overtime pay.  Employees can challenge their employers by filing a claim with the Department of Labor or by suing the company themselves.   

 

One of the more common tricks companies use is to misclassify an employee as exempt from overtime pay and pay the person a salary.   People generally assume that salaried employees are not entitled to overtime pay, but this is wrong.  Your title or pay formate (salary vs. hourly) makes no difference. If  you want to know if you are entitled to overtime pay you can call our law firm and we will tell you - it is fairly easy to make this determination in most cases. 

Interns and the Entertainment Business - Is it Slavery?

An internship program is meant to provide the intern with supervised training in a profession or occupation such as a medical student working in a hospital assisting and learning from experienced doctors. 

 

However, many companies, and especially those in the Entertainment field, have turned internship programs into free labor camps.  Instead of providing supervised training in a specific area, many entertainment companies require the interns to simply work for free doing dull menial tasks such as entering names into a database.

 

College students eager for a chance to work in entertainment are taken advantage of and turned into free labor.   The "internships" are usually not educational or training oriented and instead amount to drudgery with no pay.

 

Certain radio stations owned by Cumulus Radio, for example, use interns to perform routine clerical tasks for free or to serve as free roadies who travel to locations and set up stages or equipment for promotions.   They also work inside the stations doing routine administrative or marketing support work like entering the names of contestants into a computer program.   They do all of this for free.  

 

These radio interns are not being trained or educated, instead they are being exploited for free labor.   They just do the work that another paid worker could do and there is often no educational component.  Importantly, these internship programs do not benefit the intern, instead the intern is exploited and the company benefits from free labor.     

 

In the past, the U.S. Department of Labor turned a blind eye to it, but now the law has changed and interns can no longer be forced to work for free.  Last month, the U.S. Department of Labor issued Fact Sheet #17: Internship Programs Under the Fair Labor Standards Act.   This document sets for the new rules for internship programs.  Fact Sheet 17 states that most all interns at private companies will be deemed employees who are entitled to wages and overtime pay.  This means that there is a presumption that the interns are really employees who must be paid for their work. 

 

In order for a company internship to be deemed a bona fide internship program, the following six criteria will be applied:

 

1.     The Internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

2.     The internship experience is for the benefit of the intern;

3.     The intern does not displace regular employees, but works under the close supervision of existing staff;

4.     The employer that provides the training derives no immediate advantage from the activities of the intern and on occasion its operations may actually be impeded;

5.     The intern is not necessarily entitled to a job at the conclusion of the internship; and

6.     The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

 

If all six of the above criteria are met, the intern will not be considered an employee who is entitled to wages and overtime pay.  Under these rules, I would bet that most internship programs in the entertainment industry are suspect.  The ones that I have heard about in the radio industry fail miserably and the interns are really just employees who must be paid wages and overtime pay.    

 

 

Are Interns Abused: Their Right to Minumum Wage and Overtime Pay

Lately, there has been a crack down on internship abuse by the Federal Department of Labor and many states such as California, New York and Oregon.  The recession has created a unique climate for abuse because many companies need to lower costs and there are now thousands of eager young college students clamoring for a chance to get real world work experience.   As a result, many companies recruit interns with the prospect of educational and career experience but what the interns get instead is forced drudgery and no pay.   See the New York Times article on this subject.  

 

Many corporate internships are unpaid - the interns believe they will get a genuine resume building experience but instead wind up packing boxes or shinning door knobs.  Normally, employees must be paid minimum wage and overtime pay.   But the free interns are not protected - they work for free. 

Proponents of the free internship programs claim that it is a great opportunity for students and employers alike.   But others believe that the unpaid internships are grossly unfair because only well heeled students can afford to work for free and the free programs are rife with abuse.   See The Harvard Political Review article "Weighing In: Are Interns Slaves?  

 

The free internship party is now over as government agencies are targeting these programs.  Now, companies can only offer free internship programs if the program meets a rigorous six part test developed by the U.S. Department of Labor’s Wage and Hour Division.   The goal is to prevent companies from converting internship programs into forced free labor and to instead ensure that the programs are truly educational training programs.  

 

As for the interns, they stand to recover back pay for all of those hours worked - they are entitled to be paid for their work and now they have the legal right to recover that pay.      

The 3 Things to Know about Rest Breaks in California

In California, employees ARE entitled to rest breaks.   Here are the 3 key points to remember:

1.  You are Entitled to a 10 minute break every 4 hours

California employees must be provided with a 10-minute paid rest period for every four hours worked. The 10 minute rest period should be in the middle of the work period. 

 

2.  If You Don't Get a Break, You are Entitled to an Extra Hour of Pay

If your employer does not let you take your 10 minute break after four hours, then your employer must pay one extra hour of pay at your regular rate for every day that a rest break is not provided.  

 

3.  You can Enforce Your Rights if a Break or Extra Pay is Not provided

If your employer does not provide the required rest break or pay you the extra one hour of pay at your regular rate, then you can file a wage claim with the the Division of Labor Standards Enforcement.