The Rise of Digital Wage Theft

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The days of punching a manual time-clock when you arrive at work are all but over. Digital time tracking systems now use things like facial recognition to monitor when a worker arrives and has finished for the day. However, the software that’s replaced the 19th century time-clock technology is helping some employers steal workers’ hourly pay.

This so-called wage theft is a problem for many healthcare workers, drivers, and food-service and factory employees, according to a study by Elizabeth Tippett, associate professor at the University of Oregon School of Law, published in the American Business Law Journal. An earlier report from the Economic Policy Institute found that wage theft in the US may account for more than $15 billion each year.

How digital wage theft works

Tippett’s study of 330 cases litigated in state and federal courts found three main types of digital wage theft:

  • Rounding, which happens when the software is set to alter an employee’s starting and finishing times to pre-defined increments
  • Automatic break deductions, which deduct preset time increments (for lunch or other breaks) from pay, regardless of whether the break was taken
  • Time shaving, which takes place when managers alter time records to pare down the number of hours worked

Read more about this study in this article by John Detrixhe. 

Supreme Court Denies Overtime Pay to Service Advisors at Auto Shops & Dealerships

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This week in Encino Motorcars, LLC v. Navarro, the Supreme Court limited overtime pay for service advisors at car dealerships nationwide, ruling that those employees are primarily salespeople who sell brake jobs, oil changes and other service work. Encino Motorcars' current and former service advisors sought backpay under the Fair Labor Standards Act (FLSA) overtime-pay requirement, 29 U.S.C. 213(b)(10)(A). The requirement exempts “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements.”

The Supreme Court, in an 5-4 opinion authored by Justice Thomas, reinstated the dismissal of the suit. According to the Court, service advisors are “salesm[e]n . . . primarily engaged in . . . servicing automobiles." The ordinary meaning of “salesman” is someone who sells goods or services, and service advisors “sell [customers] services for their vehicles,” Service advisors are also “primarily engaged in . . . servicing automobiles.” “Servicing” can mean either “the action of maintaining or repairing” or “[t]he action of providing a service.” Service advisors satisfy both definitions. They meet customers; listen to their concerns; suggest repair and maintenance services; sell new accessories or replacement parts; record service orders; follow up with customers as services are performed; and explain the work when customers return for their vehicles. While service advisors do not spend most of their time physically repairing automobiles, neither do partsmen, who are “primarily engaged in . . . servicing automobiles.”

The Court rejected giving Chevron deference to the federal agency and rejected the interpretation of the Department of Labor and the Ninth Circuit Court of Appeals, who had both relied on matching “salesman” with “selling” and “partsman [and] mechanic” with “[servicing]”. The but the word “or” is “almost always disjunctive.” Using “or” to join “selling” and “servicing” suggests that the exemption covers a salesman primarily engaged in either activity. The Court held that the FLSA gives no textual indication that its exemptions should be construed narrowly, thus ignoring the long-standing precedent that remedial statutes should be interpreted in order to provide broad protections to the individuals they seek to protect. 

Writing in dissent, Justice Ruth Bader Ginsburg said the service advisors at Encino Motorcars "work regular hours, 7 a.m. to 6 p.m., at least five days per week, on the dealership premises. Their weekly minimum is 55 hours." Federal law calls for a time-and-a-half pay after 40 hours in a week, she noted. "Because service advisers neither sell nor repair automobiles, they should remain outside the exemption and within the act's coverage," she said. Justices Stephen G. Breyer, Sonia Sotomayor and Elena Kagan agreed.

This is but one of many examples to come that will demonstrate the importance of elections on the Court. The election of Trump coupled with the Senate's highly questionable antics used to nab a seat for Justice Gorsuch has led to the elimination of overtime protections for thousands of workers across the country. Many will never see Justice Gorsuch as a legitimate member of the Court. However, his votes (expected to be 100% anti-worker) on the Court will be powerful all the same.

Read the Opinion

Uber Drivers File FLSA Class Action in New York

On June 2nd, the New York Taxi Workers Alliance filed a class action complaint on behalf roughly 5,000 New York City Uber drivers against Uber Technologies and its related entities.  The complaint alleges that Uber’s drivers are misclassified as independent contractors and that Uber’s compensation scheme falls far below statutory minimum wage and overtime requirements.

According to the complaint, Uber exercises sufficient control over their “independent contractors,” to qualify them as employees:

From fares and fees, to what to wear and what route to take, in addition to subjecting its employees to constant monitoring by GPS, Uber directs and sets the terms and conditions of their Drivers’ work.  Although Uber’s rules are often described as “suggestions,” Drivers understand clearly that failure to follow these guidelines results in temporary or permanent termination of their employment with Uber.  After working for Uber continuously for years, laboring for twelve-hour-plus shifts, for six or seven days a week, these workers simply cannot be considered independent contractors performing a “gig.”

The complaint contains claims for minimum wages and overtime under the FLSA, recovery of equipment costs, unlawful deductions, breach of contract, and promissory estoppel.

You can read a copy of the filed Complaint here.

Senate Republicans Try to Stop Pro-Worker Overtime Rules

The US Department of Labor has announced that its long-awaited new overtime rules will go into effect on December 1, 2016. As I have previously reported, the new rule is expected to extend overtime protections to 4.2 million more Americans, and it is expected to boost wages for workers by $12 billion over the next 10 years.

You can read our article outlining the new rules here.

Never wanting to miss an opportunity to display their disdain for American workers, Senate labor committee Chairman Lamar Alexander (R-Tenn.) and Senate Homeland Security and Governmental Affairs committee chairman Ron Johnson (R-Wisc.) announced yesterday that they were offering new legislation to to stop the new overtime rule dead in its tracks.

You can read their announcement here.

The bill has zero chance of becoming law mind you. They don't have the votes in the Senate and it would certainly face a Presidential veto if it were to pass. Regardless, as we enter this election season, Republican lawmakers wanted to make sure you were aware they stand firmly against American workers before you go to vote. I agree with them in this regard and hope you do keep this fact in mind when you go into the voting booth this November.

U.S. Department of Labor Announces Overtime Rule

Every week, millions of Americans work more than 40 hours a week but do not receive overtime pay. Today the Department of Labor is finalizing a rule to help fix that by updating overtime protections for workers.  In total, the new rule is expected to extend overtime protections to 4.2 million more Americans, and it is expected to boost wages for workers by $12 billion over the next 10 years.
There is a wealth of overtime information available on the Department of Labor's website including the following:

DC Circuit Upholds DOL Rule Extending Overtime Protection to Home Care Workers

Last month, the U. S. Court of Appeals for the District of Columbia Circuit unanimously upheld a Department of Labor (DOL) rule which extended the Fair Labor Standard Act’s (FLSA) minimum wage and overtime protections to certain home care workers. The case is styled Home Care Association of America et al v. Weil and the rule at issue affects nearly 2 million workers.

When the Department of Labor ("DOL") originally adopted regulations which exempted companionship services and live-in workers from minimum wage and overtime requirements such professional care typically took place outside the home in institutions. Recently, however, residential care and long-term home care services have grown tremendously and are often provided by third-party agencies, rather than workers hired directly by those requiring care. As a result of the growing and changing industry, the DOL recently adopted regulations reversing its earlier position, and requiring that employees of third-party agencies providing care in a home be subject to the FLSA’s minimum wage and overtime requirements.

In Home Care Assoc v. Weil, three associations of home care agencies challenged the DOL’s extension of the FLSA to employees of third-party agencies. The Court held that the DOL’s decision to extend the FLSA’s protections to home care workers employed by third-party agencies “is grounded in a reasonable interpretation of the statute and is neither arbitrary nor capricious.” The Court held that the DOL has the authority to “work out the details” of the applicable exemptions, and the “treatment of third-party-employed workers is one such detail.”

So, while home care workers employed directly by a person requiring care or their family continue to remain exempt under the FLSA, home care workers who are employed by third-party agencies are now entitled to overtime under the FLSA.

DOL Cracking Down On Misclassification of Employees as Independent Contractors

The U.S. Department of Labor (“DOL”) is giving increased scrutiny to companies that attempt to treat workers as independent contractors and thereby avoid tax and overtime obligations. DOL has issued new guidance warning that "most workers" should be classified as employees and not independent contractors. 

In the guidance, released on July 15, 2015, the DOL emphasizes that, while the minimum wage and overtime provisions of the Fair Labor Standards Act (“FLSA”) are applicable only to employees, the appropriate definition of "employee" under the FLSA is far broader than many employers are utilizing. The DOL further notes that, in deciding whether a worker is an employee or a contractor, courts will use the multi-factor “economic realities” test, which focuses on “whether the worker really is in business for him or herself (and thus is an independent contractor) or is economically dependent on the employer (and thus is its employee)."

This is a good development for workers as many companies have been abusing the concept of independent contractor status and using it to avoid paying overtime that workers would otherwise be owed.

Read the entire DOL guidance here. 

San Antonio-Based China Sea Restaurant Chain pays More than $500,000 to Settle Overtime Lawsuit

The owner of three China Sea Restaurants in San Antonio has agreed to pay more than $500,000 to nearly 100 employees after being sued for alleged violations of federal minimum wage and overtime provisions of the Fair Labor Standards Act ("FLSA"). 

The San Antonio Express News reports that “[China Sea] used two books to keep track of wages, one for themselves and one for falsifying records. Their illegal actions hurt the workers’ families and our community.” One set of records sent to a bookkeeper showed compliance with federal laws, the Labor Department said, but a second set revealed the employer was not paying minimum wage for all hours worked and the overtime was not paid.

According to the report, “[k]itchen staff at the three China Sea Restaurant locations routinely worked at least 60 hours per week, but their hours were not recorded. The employer paid kitchen staff a small salary that resulted in minimum wage and overtime violations. Additionally, servers were not paid properly and were owed overtime wages,” the Labor Department said.

Unfortunately, this type of wage theft is not uncommon in the restaurant industry. 

5th Circuit: A General Release in Non-FLSA State Court Case Does Not Waive FLSA Claims

In Bodle v. TXL Mortg Corp., the Fifth Circuit Court of Appeals had to decide whether to extend its holding in Martin v. Spring Break ′83 Productions, L.L.C., 688 F.3d 247 (5th Cir.2012) that a private settlement reached over a bona fide dispute regarding FLSA claims was enforceable despite the general prohibition against the waiver of FLSA claims via private settlement.

In general, FLSA claims cannot be waived through a private settlement agreement unless supervised or approved by a court or the Department of Labor. However, the Fifth Circuit previously created a limited exception to this rule for private settlement agreements reached due to a "bona fide" dispute concerning hours worked or compensation owed. In the 2012 case, Martin v. Spring Break ’83 Productions, L.L.C., the court reasoned that this limited exception would not undermine the purpose of the FLSA because “the plaintiffs did not waive their claims through some sort of bargain but instead received compensation for the disputed hours.

Applying Martin, the district court in Bodle enforced a generic, broad release against the plaintiffs’ subsequent FLSA claims, even though the release was obtained through the private settlement of a prior state court action that did not involve the FLSA or any claim of unpaid wages. Because it reasoned that it could not be assured under the facts at bar that the release at issue resulted from a bona fide dispute regarding overtime wages, the Fifth Circuit declined to extend Martin and reversed.

Read the entire decision here.

Overtime Myth - Employees Being Paid A Salary Are Not Entitled to Overtime

Many employees wrongly believe that if they are salaried, they don’t have the right to overtime. This is simply false! Being paid a salary is only one component of the determination of whether or not an employee is entitled to overtime pay.

Generally, under the Fair Labor Standards Act (FLSA), employees are considered “exempt” from overtime if they are paid a salary of at least $455 per week without deductions for time off AND they perform certain duties falling within one of the recognized exemptions as defined by the FLSA. There are a number of specialized exemptions but as a general rule, employees who actually perform production work (clerical, manual labor, inside sales, many assistant manager duties, factory production work, etc) are entitled to be paid overtime for all hours worked over 40 per week.

Unfortunately some employers try to take advantage of employees by telling them that they are "salaried" and therefore not entitled to overtime. 


Payless Shoes Settles Overtime Collective Action Lawsuit

Under the Fair Labor Standards Act, employees can be exempt from the overtime pay requirement under the “Executive exemption” if the employee’s primary duty is managing the business. While there’s no hard-and-fast rule for exactly how much time must be spent managing—it’s safe to say that it needs to be more than the 5-10 hours per week. The Act requires employees to spend the majority of their time performing specific duties in order to be exempted from overtime compensation.

Many employers purposely misclassify staff as exempt employees because a company that operates thousands of stores can save tens of millions of dollars by doing so.  Employers sometimes classify all employees with the title of manager as exempt from overtime under the executive exemption, even if the managers spend the majority of their time at work performing the same tasks as hourly employees. Payless ShoeSource Inc., for example, recently settled a class action wage and hour lawsuit in which its managers allege they were misclassified as overtime exempt.

The lawsuit was filed on behalf of all Payless managers who were not paid for the overtime work they performed. According to the lawsuit, managers at Payless spend the majority of their days at performing “non managerial duties such as operating cash registers, cleaning, greeting customers, and answering phones.” The lawsuit alleged Payless store managers were required to work overtime without pay.

Under the FLSA, any time spent working after eight hours a day or forty hours a week is defined as overtime. All nonexempt employees are entitled to one and one-half times their hourly rate of pay for all overtime worked.

Payless has agreed to settle the lawsuit for $2.9 million, but it may still have come out ahead by denying employees overtime due them for many years. Payless denied the claims and asserted it had complied with the law.

Should I Be Paid For Travel Time?

A common FLSA-related question we get relates to time spent traveling to the work site. Many employees have jobs that require them to drive from home to various work sites.  The company often does not provide such workers with a vehicle to drive so they have to use their own and they only start getting paid for their time after they arrive at the work site.  Is this legal?

Generally speaking, time spent traveling during normal work hours is considered compensable work time. Time spent in home-to-work travel by an employee in an employer-provided vehicle, or in activities performed by an employee that are incidental to the use of the vehicle for commuting, generally does not have to be paid. This commuting exception applies only if the travel is within the normal commuting area for the employer's business and the use of the vehicle is subject to an agreement between the employer and the employee.

So, a good general rule of thumb is to think of it in terms of commuting.  The FLSA does not require an employer to pay you for what would be considered a normal pre-work or after-work commute - even if it is to a different location in town than your normal workplace.  However, requiring you to drive to another city or another work site during normal working hours may be considered to be compensable.  


Note:  As with many legal answers, the correct answer will vary depending on the particular facts of each case and the law of your particular jurisdiction.  Questions involving the FLSA and compensation for types of work or pre- and post-work activity are highly fact sensitive.  You SHOULD NOT rely on anything you read on this site or any other website as a definitive answer for your situation.  This website is not legal advice.  You SHOULD consult with a qualified employment law specialist in your area to get a legal opinion specific to your situation and jurisdiction.

Wage Theft Costs American Workers as Much as $50 Billion a Year

Wage theft is a nationwide epidemic that costs American workers as much as $50 billion a year, a new Economic Policy Institute report finds. In An Epidemic of Wage Theft Is Costing Workers Hundreds of Millions of Dollars a Year, EPI Vice President Ross Eisenbrey and EPI intern Brady Meixell examine incidences of wage theft—employers’ failure to pay workers money they are legally entitled to—across the country. The total amount of money recovered for the victims of wage theft who retained private lawyers or complained to federal or state agencies was at least $933 million in 2012, almost three times greater than all the money stolen in robberies that year. However, since most victims never report wage theft and never sue, the real cost of wage theft to workers is much greater, and could be closer to $50 billion a year.

“Wage theft affects far more people than more well-known crimes such as bank robberies, convenience store robberies, street and highway robberies, and gas station robberies combined, and can be absolutely devastating for workers living from paycheck to paycheck,” said Eisenbrey. “For low-wage workers, the wages lost from wage theft can total nearly 10 percent of their annual earnings.”

The authors also conducted a study of workers in low-wage industries in New York, Chicago, and Los Angeles and found that in any given week, two-thirds experienced at least one pay-related violation.  They estimate that the average loss per worker over the course of a year was $2,634, out of total earnings of $17,616. The total annual wage theft from front-line workers in low-wage industries in the three cities approached $3 billion. If these findings are generalizable to the rest of the U.S. low-wage workforce of 30 million, wage theft is costing workers more than $50 billion a year.

Read More:

Click here for a copy of the entire report.

Theoretically related posts:

Courts Make it More Difficult for Employees to Pursue Tip Theft by Employers

“Wage Theft”: The Trendy Phrase That May Not Mean What You Think It Means - From Daniel Schwartz's always excellent Connecticut Employment Law Blog

Wage Theft and Misclassification Report - Contains state by state grades.



  • Originally Published 12-2-14
  • Updated:  5-26-15

Docking Pay From Salaried, Exempt Employees Is Illegal...And Very Common

The Fair Labor Standards Act (FLSA) is the federal law the controls the terms under which employees must be paid overtime. All employees fall into one of two categories "Exempt" or "Non-Exempt". If an employee is non-exempt, when they reach more than 40 hours in a given work week, they have to be paid at time and a half for any additional hours. If they are non-exempt), they aren't eligible for overtime. Most people think of non-exempt employees as "hourly" and exempt employees as "salaried".

Pro-Tip: Just because your employer pays you as salaried does not necessarily mean that you should be considered exempt and not entitled to overtime. Exempt employees are typically involved in management or high-level administration of the business. There are other exceptions as well but a good rule of thumb is this: if you are more like a rank and file line worker or clerical worker, you should probably be getting overtime. If you aren't you need to find a good employment lawyer.

As a general rule exempt employees are paid a salary and don't have to be paid overtime no matter how many hours they work. But there are other rules that come that exempt status. One important one that employers often ignore is the rule against docking pay.

Exempt employees who are late or who need to leave work early - for doctor's appointment, child care, whatever - cannot have their pay docked for missing a couple of hours of work. If an exempt, salaried employee shows up for work, even if it's just for 15 minutes, he or she must be paid for the entire day. That's the rule.

The employer can discipline, fire, or demote the employee. But it cannot dock the employee's pay.  Importantly, the employer is allowed to dock vacation time and force the employee to use that to cover the hours missed. But the employees pay may never be docked.

So what happens if the employer breaks this rule and docks pay? Well then the employer has just lost the FLSA "exemption" as to that employee. This means the employee is owed overtime for all hours over 4o worked in the last two years plus all overtime worked in the future. This can add up to a substantial amount.

So, long story short is this: If you are paid by salary and your employer docks your pay for being late or missing a few hours of work here or there, you should contact an employment lawyer right away. Your employer is taking advantage of you and breaking the law. You may be owed a substantial amount of overtime pay.

Shell Oil and Related Company Pay Over $4 Million in Overtime Back Wages Following DOL Investigation

Shell Oil Co. and Motiva Enterprises LLC, which markets Shell gasoline and other products, have agreed to pay $4,470,764 in overtime back wages to 2,677 current and former chemical and refinery employees as a result of investigations by the U.S. Department of Labor that found violations of the Fair Labor Standards Act.

The department’s Wage and Hour Division conducted investigations at eight Shell and Motiva facilities in Alabama, California, Louisiana, Texas and Washington, which found that the companies violated FLSA overtime provisions by not paying workers for the time spent at mandatory pre-shift meetings and failing to record the time spent at these meetings.

“Employers are legally required to pay workers for all hours worked,” said U.S. Secretary of Labor Thomas E. Perez. “Whether in the international oil industry, as in this case, or a local family-run restaurant, the Labor Department is working to ensure that responsible employers do not experience a competitive disadvantage because they play by the rules.”

The Wage and Hour Division’s Houston District Office coordinated investigations with the Gulf Coast, New Orleans, San Francisco and Seattle District Offices to ensure nationwide compliance by Shell and Motiva. The findings revealed that those eight Shell Oil and Motiva refineries failed to pay workers for time spent attending mandatory pre-shift meetings. The companies required the workers to come to the meetings before the start of their 12-hour shift. Because the companies failed to consider time spent at mandatory pre-shift meetings as compensable, employees were not paid for all hours worked and did not receive all of the overtime pay of time and one-half their regular rate of pay for hours worked over 40 in a workweek. Additionally, the refineries did not keep accurate time records.

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour. Workers who are not employed in agriculture and not otherwise exempt from overtime compensation are entitled to time and one-half their regular rates of pay for every hour they work beyond 40 per week. The law also requires employers to maintain accurate records of employees’ wages, hours and other conditions of employment, and it prohibits employers from retaliating against employees who exercise their rights under the law.

Source: US Department of Labor

Lady Gaga Settles Overtime Case

Last week Lady Gaga agreed to settle a federal FLSA overtime lawsuit filed by her former assistant, who claimed she’d been ripped off for overtime. The assistant claimed that she was at Gaga’s “beck and call” during the 2009-to-2011 “Monster Ball” tours — and that the singer owed her 7,168 hours of overtime and about $400,000 in damages. That's a lot of overtime.

The settlement reportedly followed a poor deposition performance by Gaga.

Depositions really are amazing tools. For those who may not know, a deposition is a kind of formal interview that typically takes place in a conference room.  The parties or their representatives are present. Their lawyers are present.  Basically one side's lawyer gets to spend the day asking questions to the other side's witness.  And, with minimal exceptions, the witness must answer those questions...under oath....on the record.  The deposition is by far the most important weapon in the lawyer's discovery tool box. There is no better vehicle for getting at the truth of the matter in a case.

As Lady Gaga apparently learned, being famous doesn't help you in a deposition. Being rich or powerful is of little assistance in a deposition.  What you look like, the car you drive and the clothes/costume you wear are all but irrelevant in a deposition.  All that matters is what you say. And according to this report from the ABAJournal, Lady Gaga said plenty.

“She thinks she’s just like the queen of the universe,” Gaga said of [the Plaintiff]. “And, you know what, she didn’t want to be a slave to one, because in my work and what I do, I’m the queen of the universe every day.”

Gaga said her employees work no more than eight hours daily, though the time is spaced out throughout the day. “You don’t get a schedule that is like you punch in and you can play f---ing Tetris at your desk for four hours and then you punch out at the end of the day,” Gaga said. “This is—when I need you, you’re available.”

In a deposition its the words that matter and these words amount to money in the bank for this overtime plaintiff. I'm sure Lady Gaga's laywer is an excellent attorney who did his/her level best to explain to his/her client about the importance of the words she used. But in the heat of the moment powerful people often can't contain themselves. They know better. They don't need to follow the directions of their attorney. They aren't afraid of this plaintiff's lawyer.  After all, they are the "queen of the universe."

The case quickly settled and the plaintiff got justice.

I like depositions.

Courts Make it More Difficult for Employees to Pursue Tip Theft by Employers

The federal courts, led by the U.S. Supreme Court, are continuing to look for ways to limit or eliminate employees’ ability to hold employers accountable for failure to pay overtime and other forms of wage theft traditionally actionable under the FLSA.

Greg Mersol at the Employment Class Action Blog posted this article recently on the courts’ efforts to shut these cases down before they even get started. He writes "[a]nyone who has dined at a restaurant is aware of the importance of tipping, even if the exact rules, like the percentage and how it should be calculated, may be a bit fuzzy at times.  From the standpoint of the restaurant, too, the standards of what may or may not be tipped work for taking advantage of the FLSA’s tip credit may be less than clear. A recent case from the Northern District of Indiana demonstrates not only some of the issues to be considered, but also that it may be difficult for a plaintiff to pursue claims challenging the amount of tipped work on a class-wide basis."

In the case, (Roberts v. Apple Sauce, Inc) the plaintiff, a former Applebee’s waitress, brought suit against the franchisee for whom she had worked, contending that it had not properly taken advantage of the tip credit exception contained in the FLSA.  She claimed that she was required, in addition to waiting tables, to perform various non-tipped duties such as dishwashing, food preparation, cleaning the kitchen and bathrooms, and trash removal. As if often the case, she sought to pursue her claims on a collective basis on behalf of the wait staff at 24 Applebee’s restaurants. 

Class and collective actions have been given a bad name through a forceful marketing campaign conducted by the U.S. Chamber of Commerce, its membership and their allies. In the FLSA context, collective actions are often the only way that employees can obtain legal counsel and effectively pursue the wages that have been stolen by their employer.  In such cases, employers often get away with wage theft because they are taking a relatively small amount of money from a large group of people.  These cases can be very expensive for a plaintiff-side employment lawyer to pursue.  The corporation will hire a large legal team who generally send hundreds of document and information requests.  There may be dozens of depositions taken.  All of this attorney time and expense (court reporters and travel around the country doesn’t come cheap) simply is not sustainable on behalf of a single employee who has lost a dollar or two per hour for the last two years.  The only way to make pursuit of such a claim viable is for all of the employees who have been similarly affected to group together and pursue their claims together. This is what companies have been trying to stop for years and where they have recently been finding a sympathetic ear among an increasingly pro-big business federal court system.

In the Applebee’s case, the Court dismissed the bulk of Roberts’ claims before the parties even engaged in discovery under a recent expansion to Federal Rule 12(b)(6). The case is significant because it signals an increasingly willingness on the part of some courts to bar plaintiffs from collective action (and therefore from any remedy at all) without even allowing normal discovery to take place. As a result, we will likely never discover the truth in this case. If the company was indeed engaged in wage theft, it will likely get away with it.  

Read the case opinion here.

Increasing Trend: Overtime Lawsuits For Off-The-Clock Work on Mobile Computing Devices

A Chicago police offer has filed suit against the city seeking overtime pay after being forced to answer emails outside of work. Employees across many industries are increasingly expected to respond to work emails in off hours. The issue arises when checking your phone for email moves from a convenience allowing you to briefly check on things at the office without needing to go to work to an expectation from the employer that you will be available 24/7.  From the AP story:

"Everybody can relate to this because people are being asked all the time these days to work for free and they are being told to work for free using their phones," attorney Paul Geiger said.

Earlier Wednesday, attorneys for both Allen and the city told a judge they had agreed on the wording of documents that will be sent to other officers asking if they want to join the lawsuit.

According to the suit, police brass pressured subordinates in the department's organized crime bureau to answer work-related calls and emails on their BlackBerrys, and then also dissuaded the officers from filing for overtime.

"A culture has developed where police officers feel compelled to work for free in order to possibly gain a promotion and/or maintain their coveted assignment," according to a plaintiff filing.

I predict more and more of these types of cases as our computing habits become increasing mobile in nature.

Read the full AP Story here.

Copy of the Court's Opinion Denying City's Motion to Dismiss.


5th Circuit Allows Individual Employees to Settle FLSA Overtime Claims Without Court or DOL Approval in Limited Union Context

Late last month, in Martin v. Spring Break Productions, LLC, No. 30671 (5th Cir. 6/24/12) the 5th Circuit threw a bit of a curve ball to employment lawyers by ruling that individual employees may settle a wage claim without court or Department of Justice approval. This represents a pretty big change from previous law...or at least from what most of us practicing employment law thought the previous law was.

In Spring Break, a union entered into a settlement of employees' FLSA claims on their behalf but the employees never personally signed any settlement documents and the agreements were not approved by the court or by the Department of Labor. Previous to this decision most employment lawyers believed that such a settlement would not be enforceable under existing case law.  Generally speaking, settlement of FLSA claims between an employer and individual employee were held to be unenforceable unless they were approved by the Department of Labor and/or a court of competent jurisdiction.  This was the law because there was a genuine fear that employers would utilized their unequal bargaining power to force employees to settle their overtime claims for far below what they were actually owed under threat (implied or otherwise) of losing their job or out of a lack of understanding as to what they were actually owed under the law.  Of course, this risk still exists.

Nevertheless, the 5th Circuit, under the particular facts in Spring Break, decided that there was a sufficient "bona fide dispute" between the parties and that the parties were adequately represented to make enforcement of the settlement agreement fair.  Given the facts of this case, I think that is probably correct.  However, this case should be limited to its facts, which are fairly unique.

In Spring Break, the individuals were represented by a union that settled unpaid overtime claims in the context of a case brought by the union. The plaintiffs received the payments and cashed the checks while they were being represented in a separate overtime action by private attorneys.  Put simply, this case stands for the proposition that when employees are represented by a union that is pursuing a grievance for unpaid overtime and employees are paid under a settlement of those claims and said employees have private lawyers representing them on the same claims when they cash the check, then the settlement does not need court approval. This is because the parties obviously had a bona fide dispute and the employees obviously had adequate representation.

While I am certain that some attorneys will try to use this case to overreach and argue that it allows settlement of individual FLSA claims in other contexts, I think this would be a misreading of what is, on its face, a fairly narrow ruling.  Situations involving union wavers, such as that at issue in Spring Break, have always been interpreted differently than the run-of-the-mill case involving unrepresented individual employees.  I don't think this case should be read as a change to the law regarding such individual employees in any respect.


Read more:

Text of Opinion

Michael Maslanka - Work Matters Blog

Russell Cawyer - Texas Employment Law Update




Texas Roadhouse Settles Wage and Hours Lawsuit

A group of wait staff employees recently filed a lawsuit against Texas Roadhouse, Inc., alleging that it had violated Massachusetts Tips Law and Massachusetts Minimum Wage Law. Ultimately, Texas Roadhouse agreed to settle the putative class action suit for $5 million.

Under Massachusetts Tips Law, only wait staff employees, service employees, or service bartenders are permitted to participate in a tip pool when the tips are used to fulfill minimum wage requirements. Massachusetts law allows an employer to use tips to, in part, fulfill minimum wage requirements for employees who receive at least $20 per month in tips. An employer may pay its employees $2.63 plus tips when the total amount paid is equal to or greater than the state’s $8.00 minimum wage requirement.

In the lawsuit, Crenshaw, et. al, v. Texas Roadhouse, Inc., the plaintiffs alleged that Texas Roadhouse improperly distributed pooled tips to employees who were not wait staff employees, service employees, or service bartenders. As a result of Texas Roadhouse’s alleged improper distribution of pooled tips, the plaintiffs claimed that they were paid less than minimum wage. The plaintiffs argued that because employees other than those who regularly and customarily received tips participated in the tip pool, Texas Roadhouse improperly claimed the tips toward the minimum wage.

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Learn more about overtime and other types of wage and hour claims here.