Owed Unpaid Wages?

Information for workers owed unpaid wages.

Unpaid Overtime Pay

Attorneys Lambasted by Judge in Proposed Overtime Settlement

Facts of the Case

The plaintiffs were call center workers who worked for Zurich American Insurance Company.  The proposed settlement would have provided the two plaintiffs a combined $22,400 in settlement of their unpaid overtime claim.  The plaintiffs asserted that they were forced to perform off-the-clock work, which should have been paid at one-and-one half their regular hourly rate.  Additionally, the settlement would provide the attorneys who procured the settlement for the two call center workers with $77,599 in attorney fees and costs.  U.S. District Judge R. Brooke Jackson did not approve.

In rejecting the proposed settlement, Judge Jackson stated: “The court believes that the parties and counsel should be ashamed of themselves for asking a federal court to approve this settlement.”  She went on to state, “This court will not approve a [Fair Labor Standards Act] settlement where the lawyers receive more than three times what the clients are receiving without an in-person hearing in which each client, named and opt-in, is present and testifies that she is satisfied with the fairness and adequacy of the settlement, and maybe not even then.”

The Plaintiffs’ attorneys seemed shocked at the intensity of the Court’s response. One of the Plaintiffs’ attorneys pointed out that “the clients are recovering more than 300% of their unpaid wages and plaintiffs’ attorneys’ fees were separately negotiated as a capped fee request whereby we asked the court to make its own determination of a reasonable fee within the cap.”  Moreover, Plaintiffs’ counsel stated that they cut their bill by over $28,000 in order to reach the settlement agreement.

The Underlying Purposes of the FLSA

The FLSA is a remedial statute that is designed to protect employees from wage abuse by their employers.  Often wage and hour lawsuits involve modest sums of money.  However, they can be incredibly expensive to litigate.  As such, the statute provides for the payment of attorney fees to a prevailing plaintiff.  Without this provision for attorney fees, many cases of wage theft would go unpunished because the value of a case would be consumed by the expenses associated with litigating the case.  As a result, it is not uncommon in an individual wage and hour case for the attorney fees to be higher than the wages owed to the plaintiff.

With this in mind, Judge Jackson’s strong disapproval of the settlement seems questionable when the plaintiffs recovered three times the amount of wages they were owed  (the FLSA provides for liquidated or double damages when it is established that the violation was willful).

The Plaintiffs’ attorneys stated that they “appreciate the court’s concern and questions and will provide such additional information to the court including clarifying that there was no confidentiality provision at issue in the settlement.”  The settlement proposal will likely be resubmitted to the Court with a more detailed explanation of its terms and conditions.

The case is Coker et al v Zurich American Insurance Company et al., case number 1:17-0166 in the U.S. District Court for the District of Colorado.

 

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Nurses Unpaid Wages Result in $9.5M Deal

In Oregon, St. Charles Health System Inc. was sued by a group of nurses alleging that they were compelled to work without pay by taking tests and studying for tests and training that benefits the company. The lawsuit was brought under the Fair Labor Standards Act (FLSA) for wage and hour violations and is pending approval for a $9.5 million dollar settlement. The FLSA allows double damages and attorney fees, and although not applicable in the current case, certain state statutes like California’s PAGA calls for additional damages and remedies as well.

The Case

The 216b Fair Labor Standards Act approval motion claims roughly 1,100 nurses will receive roughly $6 million in the deal. The class counsel has asked for roughly 25% of the fund for the fruits of her five year efforts and has asked the Court for $2.4 million dollars, claiming she put in 5,000 hours of hard work to obtain this result. No class member objected to her fee request, and judging by the hours logged, which averages 1,000 a year or 25 weeks a year on this project, this unpaid overtime suit was a concentration risk for her firm.

Thirty percent of eligible claimants filed an FLSA opt-in form, which is a high participation rate. The case averages around $6,000 per person with some awards around $10,000 for various plaintiffs who served as a lead plaintiff. The FLSA lawyer also opined that this was an excellent result considering the years spent litigating and the recovery for the class.

The Future of the Class Action Wage Case

Although legal experts have discussed ways in which the Trump administration might try to reduce wage and hour lawsuits, it appears that to date, there has been no legislation or executive order contemplated to directly circumvent employees’ rights to commence an off-the-clock lawsuit for wages earned but not paid.

According to one legal commentator, the challenge sometimes is bringing even one of these cases to the table because employers lead employees to believe that they are not entitled to pay for doing work along these lines.

 

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Federal Court Grants Conditional Certification to Housekeepers at Omni Hotel

Omni Hotels Management Corp., a large hotel chain that operates in dozens of states across the country, is facing a collective action lawsuit under the Fair Labor Standards Act (FLSA) that was brought by housekeepers employed at their hotels in the Dallas area. The case is Arceo et al. v Omni Hotels Management Corp, et al., case number 3:16-cv-03197, in the U.S. District Court for the Northern District of Texas. According to Omni’s website, they consider themselves a “luxury brand” of hotels.  However, according to the allegations made in the recent collective action lawsuit, this luxury hotel chain has failed to pay its employees overtime wages as required by the FLSA.

FLSA Lawsuit against Omni Hotel to Recover Unpaid Wages

Under the FLSA, an aggrieved employee is permitted to file a lawsuit for a violation of the Act on behalf of themselves and on behalf of all others that are similarly situated.  If the Court agrees that the plaintiffs proposed class is similarly situated, as the court did in this case, then the court will authorize notice to be sent to each individual in the class so that they have the opportunity to join the lawsuit to recover the unpaid wages.

The case was filed in the United States District Court in Dallas, Texas.  Although the case is still in its preliminary stages, U.S. District Court Judge Sidney A. Fitzwater found that it is undisputed that plaintiffs perform similar job duties for similar pay.  The class of plaintiffs was defined as “all current and former housekeepers employed by Orta at hotels located in the Dallas-Fort Worth area, including those assigned to work for Omni.”  The class is limited to employees from the past three years.

The housekeepers in this case alleged that they were not paid overtime wages for all hours worked over forty in a single workweek. The FLSA requires that all non-exempt employees be paid an overtime premium for all time worked over forty in a workweek at a rate of one and one half the employee’s regular rate of pay.  Judge Fitzwater found that there was evidence of a “factual nexus” that the Defendants failed to pay overtime premiums to housekeepers who worked more than 40 hours per week.  That evidence was strong enough to convince Judge Fitzwater that notice should be sent to other class members so that they may have the opportunity to join in the action.

Court Clarifies When Three Years of Damages Instead of Two May Be Obtained for Willful Violation of the FLSA

Under the federal Fair Labor Standards Act (FLSA), which establishes requirements for minimum wages and overtime pay, the statute of limitations is generally two (2) years. This means employees can recover unpaid overtime owed to them for the two (2) years preceding the lawsuit. But if an employer willfully violates the FLSA, the limitations period increases, allowing employees to recover an additional third year of damages.

Souryavong v. Lackawanna County

The Third Circuit’s recent decision in Souryavong v. Lackawanna County clarified this standard. To prove a willful FLSA violation, the Court noted that an employee must demonstrate that the employer actually knew of the specific FLSA requirement at issue at the time of the violation and intentionally did not comply with that requirement. Simply being aware of the FLSA is not enough to prove a willful violation. For instance, in Souryavong, the County failed to aggregate hours worked by part-time employees who worked multiple jobs for the county, which caused them to work more than 40 hours per week. Because the employees were non-exempt and worked in excess of 40 hours per week, they were entitled to overtime pay. It was undisputed that the County violated the FLSA and was thus liable for unpaid overtime dating back two years from the date the lawsuit was filed. However, the parties disputed whether the County’s violation was willful, which would have entitled the employees to a third year of damages.

The Court ultimately held that while the evidence put forth by the plaintiff showed that the County was only generally aware of FLSA provisions and did not establish that the employer was aware of the specific overtime pay problem that was at issue in the case. The Court stated, “A plaintiff must put forward at least some evidence of the employer’s awareness of a violation of the FLSA overtime mandate… A lack of evidence going to good faith is not the same as evidence in support of intentionality.” Thus, the Court awarded the plaintiff two (2) years worth of damages instead of three (3).

The Takeaway

While the Third Circuit outlined what a tough standard this is for an employee to prove, it is certainly not impossible. Employees should keep in mind any evidence or witnesses that might corroborate an argument that the employer knew of the FLSA law and that its practices violated that law, and continued its practices the same despite that knowledge.

Importantly, even if this evidence cannot be put forth, any violation of the FLSA—regardless of willfulness—still imposes serious potential liability for employers, as employees can recover up to two (2) years of unpaid wages, along with attorneys’ fees paid by the employer, for a violation of the FLSA.

Retail Workers Fighting Back Against Wage Abuse

What do retailers Burberry, Lowe’s, TJ Maxx, and Nordstrom’s Trunk Club have in common? All of them have recently faced class action lawsuits from workers alleging they were cheated out of wages and overtime.

In some cases, the retailers paid out significant sums to workers – in the millions – to settle these cases.

  • Burberry agreed to pay $2.54 million in July to settle a class action lawsuit alleging it didn’t pay workers for overtime. The employees claimed they were not paid for work done before and after their shift – which added up to as much as 30 minutes a day. In addition to the off-the-clock work, workers said they were regularly made to work through lunch breaks.
  • In February, T.J. Maxx said it would pay $8.5 million to workers who alleged in a class action lawsuit that the retail giant did not pay them for time spent waiting on managers to close up stores after hours or for meal breaks.
  • Lowe’s also settled a class action lawsuit earlier this year for $2.85 million. Workers alleged the retailer misclassified them as managers to avoid paying them overtime.

Other lawsuits currently pending, include:

Retail Workers at Risk for Wage Theft 

The above lawsuits and settlements stem from retailers failing to abide by the federal Fair Labor Standards Act (FLSA) as well as state and local employment statutes. Retail workers are particularly at risk for wage theft, which can take several forms, including:

  • Off-the-clock work: Retail workers are often asked to complete job-related tasks before and after their shifts for which they are not compensated.
  • Misclassification. Retailers often give employees who should be receiving time-and-a-half for working more than 40 hours a week job titles that sound like management positions so they can be classified as exempt from overtime.
  • Unpaid Meal Breaks. Retailers often force employees to perform work during unpaid meal breaks – but do not compensate them for that time.

If you are a retail worker and feel your employer is violating the FLSA or committing other wage and hour abuses, you should talk to an experienced employment lawyer about your situation. You may have a case.