Companies will often argue that conditionally certifying classes under the FLSA is not appropriate because some discovery has occurred. However, courts often reject such arguments.
For example, in Bunyan v. Spectrum Brands, Inc., the Southern District of Illinois only abandoned the two-step conditional certification approach following over 15 months of discovery by the parties during which the plaintiffs acquired a list of potential class members. 2008 U.S. Dist. LEXIS 59278, *13 (S.D.Ill. July 31, 2008). Other courts have also reluctantly applied an intermediate analysis only after (i) significantly more discovery was completed compared to this case; or (ii) informal notice was sent to potential opt-ins by the plaintiffs. See Bouaphakeo v. Tyson Foods, Inc., 564 F. Supp. 2d 870, 894-901 (N.D. Iowa 2008) (applying an intermediate analysis only after 300 individuals had joined the case and 22 depositions had been conducted by the parties); Basco v. Wal-Mart, 2004 U.S. Dist. LEXIS 12441 (E.D. La. July 2, 2004) (applying the intermediate analysis after approximately five years of litigation including six amendments to the complaint and the plaintiffs moving for Rule 23 class certification); Williams v. Accredited Home Lenders, Inc., 2006 U.S. Dist. LEXIS 50653, *11-12 (N.D. Ga. July 25, 2006) (“The Plaintiffs short circuited the process first by disseminating informal notice of the lawsuit and the opportunity to opt-in. Without court supervised notice, about 150 current or former loan officers, have filed consent forms to opt-in as Plaintiffs. The Defendant then sought and obtained the Court’s permission to take depositions of about 20 of the opt-in Plaintiffs.”).

Second, Maryland district courts have noted that it is improper to move beyond the initial conditional certification stage analysis until after the completion of all discovery. See Mercado v. N. Star Founds., Inc., 2011 U.S. Dist. LEXIS 43229, *3-4 (D. Md. Apr. 21, 2011) (second stage occurs after completion of discovery); Syrja v. Westat, Inc., 756 F. Supp. 2d 682, 686 (D. Md. 2010) (“in the second stage following the conclusion of discovery”). This is consistent with other federal courts that have rejected the application of a more stringent analysis following the completion of similar limited initial discovery concerning conditional certification. See e.g. Helmert v. Butterball, LLC, 2009 U.S. Dist. LEXIS 116460, *23 (E.D. Ark. Dec. 15, 2009) (refusing to apply a heightened analysis prior to the close of merits discovery); West v. Border Foods, Inc., 2006 U.S. Dist. LEXIS 96963, *9 (D. Minn. June 12, 2006) (analyzing the plaintiff’s motion for conditional certification under the initial stage despite the exchange of interrogatories and document requests, and three depositions of employees of the defendant); Lyons v. Ameriprise Fin., Inc., 2010 U.S. Dist. LEXIS 98496, *8-9 (D. Minn. Sept. 20, 2010) (“As an initial matter, [the defendant] argues for a ‘heightened’ or ‘intermediate’ standard rather than the lenient standard typically applied at the first stage, since some discovery has been conducted. The Court rejects this suggestion.”) (internal citations omitted).

In Smith v. The Bank of New York Mellon Corporation, 2011 U.S. Dist. LEXIS 21996 (W.D. Pa. Jan. 20, 2011), the Western District of Pennsylvania denied an employer’s motion for summary judgment that an information technology worker was an exempt administrative employee under the Pennsylvania Minimum Wage Act (“PMWA”). Plaintiff Herman Smith worked as an “FXR Specialist” which performed formal file transfers between internal BNY Mellon business units and other external entities. In this position, Mr. Smith earned a salary of over $70,000 a year but alleged that he did not recieve overtime compensation for the 50 plus hours he worked each week. Unlike the FLSA, the PMWA does not have an exemption for computer employees, so the employer attempted to escape liability by arguing that Mr. Smith was a bona fide administrative employee.
The Court ruled in favor of Mr. Smith due to the existence of genuine issues of material facts surrounding Plaintiff’s primary duties as an FXR Specialist as well as the discretion and independent judgment he was able to utilize in that position. The Court relied heavily upon federal regulations and cases interpreting the administrative exemption under the FLSA in reaching its conclusion.

The Boss has found so many ways to violate federal and state overtime law that it’s not really possible to say which violation is most pervasive.  In this edition of The Wage and Overtime Quarterly, however, we explore a violation that certainly ranks near the top of the list of overtime rip-offs: Misclassifying salaried employees as “executives” who are exempt from overtime coverage.

This is an important topic for all you Trial Lawyers, advocates, and Winebrake Law Firm clients who receive this newsletter.  Government investigators cannot possibly clean up America’s wasteland of wage and overtime violations.  So it is up to Trial Lawyers and Workers to recognize workplace abuses and refer the abuses to lawyers who are dedicated to wage and overtime litigation.  History has proven that lawsuits are the most effective way to vindicate the rights of American workers.

The “Executive” Employee Exemption from Overtime Coverage   

The Fair Labor Standards Act (“FLSA”) and state laws such as the Pennsylvania Minimum Wage Act (“PMWA”) generally require that employees receive overtime pay equaling one-and-one-half-times their regular rate of pay for hours worked over 40 during the workweek.  Under these laws, however, “executive” employees are exempt from receiving overtime pay.

The Executive Exemption makes good sense.  After all, real company “executives” are not the types of employees who need the protections of the FLSA’s overtime provision.  That is because real executives have the clout and bargaining power to fend for themselves in negotiating with The Boss for fair pay.

Unfortunately, as discussed below, many companies use the Executive Exemption to deny overtime pay to mid-level and low-level employees who lawmakers never intended to exempt from overtime pay protections.  Year after year, these abuses of the Executive Exemption illegally deprive working American families of millions of dollars in hard-earned wages.

Corporate America’s Abuse of the Executive Exemption

The Executive Exemption is a bonanza for American business.  And far too many companies abuse the exemption to force supposedly exempt “Managers,” “Assistant Managers,” “Department Managers,” “Office Managers,” and “Team Leaders” (the list of exaggerated job titles is endless) to work absurdly long hours performing routine tasks for free.  For sure, there is nothing “executive” about the day-to-day work performed by many of these employees.  Working the cash register, completing routine paperwork, stocking the shelves, unloading delivery trucks, taking inventory, cleaning the work area, and performing manual labor are not the types of job duties that are supposed to fall within the Executive Exemption to overtime coverage.

Abuse of the Executive Exemption is devastating to America’s working families. I am very sorry to report that The Winebrake Law Firm represents many supposedly exempt “executives” who  routinely work 60, 70, and even 80 hours per week.  Some of these individuals barely make minimum wage when their weekly salaries are divided by their hours worked.  Their classification as exempt from the overtime laws is disgraceful.

Recognizing Abuses of the Executive Exemption

The Executive Exemption rip-off thrives when employees do not understand their rights.  Too many employees believe they are “exempt” from overtime coverage just because they are “salaried.”  This belief is simply wrong.  Under the law, a salaried employee qualifies as an exempt “executive” only if the employee’s real-life job duties entail work of a truly executive nature.

Most overtime misclassification lawsuits turn on whether the employee’s real-life job duties actually entail executive work.  Importantly, in determining whether the Executive Exemption applies, the employee’s job title is not particularly relevant.  The federal regulations specifically state that “[a] job title alone is insufficient to establish the exempt status of an employee.”  29 C.F.R. § 541.2.  Thus, it does not matter whether the supposedly exempt employee has the term “Manager” in his or her job title.

To qualify for the Executive Exemption, all of the following requirements must be satisfied:

•           The employee must receive a guaranteed weekly salary of at least $455 per week;

•           The company generally may not make deductions from the fixed weekly salary;

•           The employee’s primary duty must be managing the business operation or a recognized department or subdivision of the business operation;

•           The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and

•           The employee must have the authority to hire and fire other employees, or, at least, his/her recommendations as to hiring and firing must be given particular weight.

Moreover, under Pennsylvania law, any employee classified under the Executive Exemption must spend at least 60% (and, sometimes, 80%) of his/her time performing the types of tasks listed above.

Application of the above requirements requires a careful analysis of the employee’s actual job experience and a detailed review of federal/state regulations and court decisions.  If you have any reason to suspect that you, a co-worker, or a client might have been improperly denied overtime under the Executive Exemption, you should call a law firm that concentrates in wage and overtime law (e.g. The Winebrake Law Firm!!!) for a detailed evaluation.

Examples of Salaried Employees who are Commonly Misclassified as Exempt from Overtime Coverage

Here are some examples of salaried employees who commonly are misclassified as exempt from overtime coverage under the Executive Exemption and other “white collar” exemptions:

•           Managers and Assistant Managers of small retail stores such as “dollar stores,” “convenience stores,” and retail shops within shopping malls;

•           Managers of departments within larger retail establishments such as department stores, “big box” stores, supermarkets, and drug stores;

•           Newspaper sales managers;

•           Bookkeepers or Accountants without CPAs;

•           Social Workers and Case Managers working for social service agencies;

•           Licensed Practical Nurses (LPNs), Medical Assistants, and similar line-level health care employees;

•           Computer technicians and computer support staff (including help desk staff) who do not regularly write code;

•           Warehouse managers and supervisors;

•           Work crew captains or foremen;

•           Mortgage loan officers;

•           Home health aids or visiting nurses employed in Pennsylvania;

•           Call center sales representatives; and

•           Trainees for exempt positions.

 “Only YOU Can Prevent Overtime Abuse”

Smokey the Bear used to appear on TV to tell us: “Only You Can Prevent Forest Fires.”  Well, the same can be said of overtime abuse.  Too many Trial Lawyers, advocates, and workers believe that the overtime laws are too complicated for them to understand, so they leave it to The Boss to interpret the law.

But The Boss is under pressure to feed the bottom line, so his interpretation of the overtime law might not be too worker-friendly.  If you believe the overtime rights of you or your client are being violated, give us a call.  Stop guessing at your overtime rights.

Clients and referring counsel often ask whether workers can bring a wage or overtime lawsuit against a former employer and, if so, how far back their damages can extend.  Here’s what you need to know:

Under the federal Fair Labor Standards Act (“FLSA”) and every similar state law, employees can sue former employers for wage and overtime violations.  In fact, well over 50% of our firm’s clients no longer work for the defendant company.

 The statute of limitations period for an FLSA claim is either two years or, in the event of a “willful violation,” three years.  See 29 U.S.C. § 255(a).  However, under the Pennsylvania Minimum Wage Act (“PMWA”), which generally offers the same wage and overtime protections as the FLSA, the statute of limitations period always is three years.  Thus, in Pennsylvania, a worker who files suit on September 1, 2009 can recover damages going back to September 1, 2006.

That’s why it’s so important for your clients to commence their wage and overtime action as promptly as possible.  This is true even if their worker’s compensation claim is pending.  In fact, resolution of the wage and overtime suit might even enhance your client’s worker’s compensation award by elevating her weekly earnings figure.

Our firm has successfully handled claims involving the overtime pay rights of drivers employed by bus companies that provide transportation to disabled and elderly passengers.  These bus companies often operate under contracts with local governments or local public transit agencies, and they employ thousands of drivers throughout Pennsylvania and elsewhere.

Many of our friends in the workplace injury bar know how hard these drivers work and how often they get hurt while lifting and assisting passengers.  But what about their overtime rights? 

For sure, many local bus companies pay their drivers the time-and-one-half overtime premium required under the Fair Labor Standards Act (“FLSA”), the Pennsylvania Minimum Wage Act (“PMWA”), and similar state laws.  Unfortunately, less-generous bus companies deny their drivers overtime pay by asserting that the drivers are covered by the Motor Carrier Act Exemption (“MCA Exemption”) to overtime coverage.

The FLSA and similar state overtime laws contain an MCA Exemption that applies to “employee[s] with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service.”  See, e.g., 29 U.S.C. § 213(b)(1); 43 P.S. § 333.105(b)(7).  But the MCA Exemption is not as broad as some employers think.  As the Department of Labor has explained, the MCA Exemption is strictly limited to employees who, among other things, “engage in activities of a character directly affecting the safety of operation of motor vehicles in the transportation on the public highways of passengers or property in interstate or foreign commerce within the meaning of the Motor Carrier Act.”  29 C.F.R. § 782.2(a) (emphasis supplied); accord Dole v. Solid Waste Services, Inc., 733 F. Supp. 895, 929 (E.D. Pa. 1989).  In other words, for the MCA Exemption to apply, the drivers must be engaged in interstate commerce.

Therein lies the problem for many private bus companies throughout Pennsylvania and elsewhere.  In providing transportation services to disabled and elderly clients, the drivers almost never cross state lines.  This is especially true when the bus company’s service area lies well within a state’s boundaries.  But it also tends to hold true for bus companies that operate close to state borders.  Simply put, the day-to-day routines of most people – including most elderly and disabled people – rarely take them over state lines.

The case of Dauphin v. Chestnut Ridge Transportation, Inc., 544 F. Supp. 2d 266, 273 (S.D.N.Y. 2008), is instructive.  There, the federal judge carefully reviewed the pertinent legal authority and concluded that, for the MCA Exemption to cover a driver, the bus company must prove that the driver’s trips across state lines are “more than de minimis” or are “a ‘natural, integral and . . . inseparable part’ of” the driver’s job.  Id. at 275.

Here’s the bottom line:  If you represent drivers who currently or formerly worked for a local bus company, you should ask them three relevant questions:  (1) Did they ever work over 40 hours per week?  (2) On such occasions, did they receive time-and-one-half overtime pay?  (3) If they did not receive overtime pay, did they regularly drive over state lines?  If you client neither received overtime nor regularly drove over state lines, we would be delighted to provide the client with a free and confidential consultation.

In recent years, district courts within the Third Circuit have frequently held that workers cannot bring “hybrid” federal wage and hour claims under the FLSA as a collective action under 29 U.S.C. §216(b) along side state wage and hour class action claims under Federal Rule of Civil Procedure 23. See, e.g., Otto v. Pocono Health Sys., 457 F. Supp. 2d 522, 524 (M.D. Pa. 2006) (“To allow an Section 216(b) opt-in action to proceed accompanied by a Rule 23 opt-out state law class action claim would essentially nullify Congress’s intent in crafting Section 216(b) and eviscerate the purpose of Section 216(b)’s opt-in requirement.). The notion that such claims cannot be simultaneously pursued in federal court has become known as “inherent incompatibility.”

However, in an opinion issued on January 18, 2011, the Seventh Circuit Court of Appeals rejected this idea, holding that “there is no categorical rule against certifying a Rule 23(b)(3) state-law class action in a proceeding that also includes a collective action brought under the FLSA.” Ervin v. Os Restaurant Services, Inc., 2011 U.S. App. LEXIS 863, *3-4 (7th Cir. Ill. Jan. 18, 2011). “Nothing in the text of the FLSA or the procedures established by the statute suggests either that the FLSA was intended generally to oust other ordinary procedures used in federal court or that class actions in particular could not be combined with an FLSA proceeding.” Id. at *4.

In Ervin, former employees of an Outback Steakhouse restaurant brought claims under both the Fair Labor Standards Act and the Illinois Minimum Wage Law alleging that Outback failed to pay them minimum wage and overtime due to their tip sharing/pooling practices. The district court declined to certify the state law claims under Rule 23 because “of what he saw as a conflict between the two different forms of aggregate litigation.” Id. at *7-8.

The Seventh Circuit examined Congressional intent behind the FLSA and disagreed with the district court, noting that “[t]here is ample evidence that a combined action is consistent with the regime Congress has established in the FLSA.” Id. at *15. Moreover, the Seventh Circuit rejected the notion that §216(b)’s opt-in procedure and the opt-out nature of Rule 23 would create confusion among class members. In fact, the Court noticed that having two parallel actions, one in federal court and one in state court, would create more potential for confusion than having a class’s wage and hour claims proceed in one venue. Id. at *18-19.

The Ervin Court also addressed whether a district court could have supplemental jurisdiction over state wage and hour claims pursuant to 28 U.S.C. §1367. It held that the requirements of §1367(a) are satisfied where the state wage claims are closely related to the FLSA collective action. Id. at *21. The court also held that “a simple disparity in numbers should not lead a court to the conclusion that a state claim ‘substantially predominates’ over the FLSA action” as precluded by §1367(c). Id. at *24. In fact, the court observed that the 45 current and former Outback workers who had joined the suit (compared to the 180 to 250 who may be covered by the Rule 23 claims) was a “low” ratio ,suggesting that the state claims did not predominate over the FLSA claims in this case. Id. at *25. In closing, the Ervin court stated:

We agree with the D.C. Circuit in Lindsay and the Ninth Circuit in Wang that the Third Circuit decision in De Asencio represents only a fact-specific application of well-established rules, not a rigid rule about the use of supplemental jurisdiction in cases combining an FLSA count with a state-law class action. In our case, the record reflects no reason to doubt that it is sensible to litigate all theories in a single federal proceeding. The identity of the issues, the convenience to both plaintiffs and defendants of not having to litigate in multiple forums, and the economy of resolving all claims at once suggests that an exercise of supplemental jurisdiction will normally be appropriate. In all but the most unusual cases, there will be little cause for concern about fairness or comity.

Id. at *26.

While the Seventh Circuit’s opinion is not the first circuit court to reject inherent incompatibility, see, e.g, Wang v. Chinese Daily News, Inc., 623 F.3d 743, 753-55, 760-62 (9th Cir. 2010) (holding that a district court properly certified a Rule 23(b)(2) class along with an FLSA collective action and properly exercised supplemental jurisdiction over the state-law claim), the Third Circuit Court of Appeals has yet to address this issue. As a result, overtime lawyers in Pennsylvania, New Jersey and Delaware must still confront this issue when planning any class/collective action litigation.

The full panoply of wage and overtime rip-offs in the landscaping and construction industries are too vast to be covered by this mere Newsletter.  Notwithstanding, when you speak with your clients in the landscaping and construction industries, you should be on the lookout for the Company’s failure to pay for travel between the company headquarters and the work location.

Many landscaping and contracting companies require the workers to report to headquarters at the beginning of the workday.  There, the workers gather equipment and materials needed for the day’s project, load the company vehicle, and travel to the worksite.  Then, at the end of the day, the workers must return to headquarters, unload the vehicle, and perform other end-of-shift duties.

The illegality arises when the Company pays the workers only for the time spent on-site at the work location.  Under such circumstances, workers are cheated out of many hours of compensable work.  Indeed, we have represented clients who have been owed thousands of dollars for of unpaid travel time at the beginning and end of the workday.

The Department of Labor has enacted a regulation that specifically addresses travel during the (more…)

Our firm has successfully handled claims involving the overtime pay rights of drivers employed by bus companies that provide transportation to disabled and elderly passengers.  These bus companies often operate under contracts with local governments or local public transit agencies, and they employ thousands of drivers throughout Pennsylvania and elsewhere.

Many of our friends in the workplace injury bar know how hard these drivers work and how often they get hurt while lifting and assisting passengers.  But what about their overtime rights? 

For sure, many local bus companies pay their drivers the time-and-one-half overtime premium required under the Fair Labor Standards Act (“FLSA”), the Pennsylvania Minimum Wage Act (“PMWA”), and similar state laws.  Unfortunately, less-generous bus companies deny their drivers overtime pay by asserting that the drivers are covered by the Motor Carrier Act Exemption (“MCA Exemption”) to overtime coverage.

The FLSA and similar state overtime laws contain an MCA Exemption that applies to “employee[s] with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service.”  See, e.g., 29 U.S.C. § 213(b)(1); 43 P.S. § 333.105(b)(7).  But the MCA Exemption is not as broad as some employers think.  As the Department of Labor has explained, the MCA Exemption is strictly limited to employees who, among other things, “engage in activities of a character directly affecting the safety of operation of motor vehicles in the transportation on the public highways of passengers or property in interstate or foreign commerce within the meaning of the Motor Carrier Act.”  29 C.F.R. § 782.2(a) (emphasis supplied); accord Dole v. Solid Waste Services, Inc., 733 F. Supp. 895, 929 (E.D. Pa. 1989).  In other words, for the MCA Exemption to apply, the drivers must be engaged in interstate commerce.

Therein lies the problem for many private bus companies throughout Pennsylvania and elsewhere.  In providing transportation services to disabled and elderly clients, the drivers almost never cross state lines.  This is especially true when the bus company’s service area lies well within a state’s boundaries.  But it also tends to hold true for bus companies that operate close to state borders.  Simply put, the day-to-day routines of most people – including most elderly and disabled people – rarely take them over state lines.

The case of Dauphin v. Chestnut Ridge Transportation, Inc., 544 F. Supp. 2d 266, 273 (S.D.N.Y. 2008), is instructive.  There, the federal judge carefully reviewed the pertinent legal authority and concluded that, for the MCA Exemption to cover a driver, the bus company must prove that the driver’s trips across state lines are “more than de minimis” or are “a ‘natural, integral and . . . inseparable part’ of” the driver’s job.  Id. at 275.

Here’s the bottom line:  If you represent drivers who currently or formerly worked for a local bus company, you should ask them three relevant questions:  (1) Did they ever work over 40 hours per week?  (2) On such occasions, did they receive time-and-one-half overtime pay?  (3) If they did not receive overtime pay, did they regularly drive over state lines?  If you client neither received overtime nor regularly drove over state lines, we would be delighted to provide the client with a free and confidential consultation.

I recently read an interesiting (and, I think, important) decision in which Middle District of Pennsylvania Judge Thomas I. Vanaskie reasoned that a “workweek standard” must be applied in determining whether a company violated the minimum wage provisions of the Pennsylvania Minimum Wage Act (“PMWA”), 43 P.S. sec. 333.101, et seq., by failing to pay workers for all hours worked.  In Masterson v. Federal Express Corp., 2008 U.S. Dist. LEXIS 99622 (M.D. Pa. Dec. 10, 2008), the workers claimed that the copmany did not pay them for all hours worked and they sought the minimum wage of $7.15 for every unpaid hour.  After analyzing the PMWA, Judge Vanaskie held that an employer does not violate the PMWA’s minimum wage provision so long as the employee’s weekly pay divided by all hours worked (including the unpaid hours) exceeds the $7.15 minimum wage.  In applying this method, the court utilized what is known as the “workweek standard” and rejected the view that every hour stands alone under the PMWA’s minimum wage provision.  This case has important implications for “off-the-clock” cases in which the workers do not work in excess of 40 hours per week.  Of course, once the work hours cross the 40-hour threshold, the PMWA’s overtime pay provisions kick in, and the workers’ damages will flow from their “regular rate” of pay.  So Masterson has no bearing on overtime cases.