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May 27, 2004
Overtime Lawsuits on the Rise

Class-action lawsuits alleging companies violated the Fair Labor Standards Act's overtime rules for white-collar workers have increased from 31 in 1997 to 102 in 2003, according to a report by the Administrative Office of the U.S. Courts.

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The study was first reported by Bloomberg News.

Many of the lawsuits have targeted retailers, such as Dollar General and Wal-Mart, Bloomberg News notes. In the lawsuits, white-collar workers allege they were entitled to overtime, but the companies classified them as exempt from the overtime requirements of the FLSA. The companies argue they have properly classified workers.

The Labor Department estimates that employers spend about $2 billion per year in litigation costs for overtime suits, Bloomberg News notes.

The department says its new overtime rules, which the department published in April, will clarify who is entitled to overtime and reduce the number of overtime lawsuits.

The rules, effective August 23, alter the tests used to determine overtime eligibility. The rules raise the salary threshold below which workers will be generally guaranteed overtime. The threshold increases from $8,060 per year to $23,660 per year.

The rules also create an exemption for "highly compensated" employees who earn $100,000 per year or more and who customarily and regularly perform any one or more of the exempt duties or responsibilities of an executive, administrative, or professional employee.

In a class-action suit against Dollar General, managers are seeking $100 million in overtime pay.


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