August 08, 2002
Employee Overtime Lawsuits Surge
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Increasing numbers of employees in so-called "professional" jobs are filing lawsuits against their employers claiming that they were cheated out of overtime pay, the Associated Press reports.
The rapid increase is the result of an ongoing debate in who is entitled to overtime pay and who is not. Some of the claims have resulted in multi-million dollar settlements.
The Fair Labor Standards Act exempts salaried workers in executive, administrative or professional jobs from receiving overtime pay. But many believe that the law, seldom revised since its 1970 enactment, relies on outdated job descriptions, technology and salary figures.
Manufacturing jobs have decreased and people in professional jobs are expected to produce more and work longer hours. Employees and employers also have very different ideas of the definition of a professional, and what constitutes fair pay, the AP reports.
Omar Belazi, a former RadioShack manager, often worked 65 hours a week to clean the store and to hit sales targets. But they never paid him more for his efforts.
Last month, RadioShack agreed to pay Belazi and 1,300 other current and former California managers $29.9 million to settle a lawsuit alleging that RadioShack cheated them out of overtime.
But the RadioShack settlement is only the most recent in an ongoing string of overtime lawsuits against corporations, many of which have taken place in California. Starbucks agreed to pay $18 million to a group of California managers. SBC Pacific Bell settled with a group of engineers for $35 million. In Louisiana, drug-store company Eckerd Corp. paid $8 million to settle a suit brought by 1,100 pharmacists.
RadioShack senior vice president and general counsel Mark Hill told the AP, "It's become the cause of action du jour in California. These are not underpaid hourly workers who are being mischaracterized as salaried workers simply so an employer would not have to pay for long hours worked." He noted that the average RadioShack manager earns $60,000 a year.
Some suits accuse employers of refusing to pay overtime to salaried workers, while others accuse employers of forcing hourly employees to work off the clock, the AP reports.
Wal-Mart Stores Inc. is currently facing lawsuits in 30 different states from hourly workers who accuse the company of forcing them to work many hours off the clock. According to the AP, the company settled a similar suit two years ago in Colorado.
According to the American Bar Association, workers filed 79 federal collective-action lawsuits seeking overtime pay. That number for the first time surpassed the number of class-action lawsuits against employers for job discrimination.
Labor advocates and lawyers for workers say the suits show that the Fair Labor Standards Act and state labor laws remain vital in protecting workers. But employers contend that the outdated laws are just a way for highly paid employees to win undeserved overtime pay.
"Employers typically want to put everybody into an exemption (from overtime) if they possibly can," Robert Thompson, the attorney who represented the RadioShack workers, told the AP.
The Department of Labor announced it would update regulations and focus protection on people with low-wage jobs. It also said it wants to work more closely with employers to help them better understand the law, according to the AP.
But Tammy McCutcheon, administrator of the DOL wage and hour division, says that the government is not easing up on employers who don't pay overtime. She cited the DOL's lawsuit against Tyson Foods Inc. earlier this spring, which accused the food processing company for refusing to pay workers for time putting on and taking off protective gear.