In September 2016, a lawsuit was filed against Loomis Armored, LLC for unpaid overtime wages. The lawsuit was filed on behalf of employees who worked for Loomis as drivers, messengers, or a guards. The Plaintiff alleged that Loomis unlawfully relied on the Motor Carrier Exemption to deny paying overtime benefits in violation of the Fair Labor Standards Act. In support of the case, Plaintiff attached paystubs that illustrated he often worked well in excess of 40 hours per week without any overtime pay. The lawsuit is currently pending in the United States District Court for the Southern District of New York.
Unpaid Overtime Pay
It’s no secret that most restaurants operate on razor-thin profit margins. To be successful, restaurant owners and operators must budget carefully and plan for every expense. That is their responsibility.
Unfortunately, some establishments do not take budgeting seriously – and try to make up shortfalls on the backs of restaurant workers. Some may not budget for the actual cost of paying employees their proper wages and overtime, which can lead to wage theft.
Restaurant owners caught in a budget crunch, for example, might be tempted to misclassify workers as being exempt from overtime. They will call a server or host an assistant manager, or give a cook the title sous chef, and say they are now exempt. If that employee’s duties are still those of an hourly worker, however, and they do not have any managerial responsibilities or personal discretion over how they do their job, then they are not exempt from overtime. The employer has merely used that title to make up for a budget shortfall.
Tip-sharing violations are another way for restaurants that are short on cash to cheat their employees. Under the federal Fair Labor Standards Act (FLSA), tipped employees are entitled to their tips and do not have to turn them over to an employer. That does not mean an employer can’t have a tip-pooling program, but this must be done in compliance with the FLSA. Tip-pooling policies must be clearly laid out to tipped employees, for example. The percentage that servers, bartenders, and others are expected to tip out should also be clear and consistent.
Employers also can’t use tip sharing to top up the wages of cooks and dishwashers who are not normally tipped. Facing a cash flow problem, some restaurant owners are often tempted to use shared tips as a way of making it look like all staff are being paid minimum wage. They will underpay kitchen staff and use tip-pooling to make up the difference.
If a restaurant is dodging overtime, underpaying workers, or messing with tips, that can constitute wage theft under the FLSA. Restaurant staffs have tough, demanding jobs and deserve to receive every penny they have earned. It is not their fault that their employer has failed to budget properly for crucial expenses such as wages and overtime.
For many years, even decades, large companies have tried to cut costs by taking once internal functions and paying other companies to handle those operations instead. Using business process outsourcers and outside call centers, for example, became very common. Today, however, the trend is reversing.
Call Center “Insourcing”
Driven by customer complaints of poor service, many of the same companies who outsourced their call centers have responded by bringing them back in-house. For some, this “insourcing” is a way to demonstrate that they value their customer relationships enough to ensure good, consistent service.
Zappos and 1-800-GOT-JUNK are both famous for this and use it as a way to differentiate themselves from competitors. Hotel chains like Hilton, some airlines, and even Xerox have all made the move back to in-house call centers.
Even though those jobs are now handled by a company’s own personnel, however, does not mean that the wage and overtime abuse that plagues the outsourced call center industry has gone away. In many cases it has just continued, now taking place under the employer’s own roof.
Call Center Wage Theft & Wage Abuse
Just like any other employee in a company, call center workers are protected by the federal Fair Labor Standards Act (FLSA). Under the FLSA, they must be paid at least minimum wage as well as overtime if they work more than 40 hours a week. This is the case whether they work in an office or from home.
Too often, the wage and overtime theft that prompted the U.S. Department of Labor to issue a warning about the call center industry continues when that work is brought in-house. Most often it involves not paying workers for time spent on essential tasks performed before, after, and even during their shifts, including:
- Booting up computers, logging into networks and launching applications before starting work
- Closing out applications, logging off networks and shutting down computers after clocking out
- Downloading and reading company directives and other work-related information
- Reading email before and after work
- Not counting time spent dealing with technical support, when systems go down or computers are disconnected from the network, towards hours worked
For many call center workers, these tasks can add up — sometimes 30 minutes or more per shift. Since many workers spend more than 40 hours a week at their jobs, this could also mean they are owed not only regular wages but also overtime at time-and-a-half.
Call center work is demanding and employees often put in long hours. Whether they work for an outsourced provider or in-house for a company, agents deserve to be paid everything they are owed.
To cut costs, many call center companies now employ agents who work from home. While it’s perfectly fine to save money on office space, those telecommuting employees must still be paid at least the minimum wage, as well as overtime. This is mandated by the federal Fair Labor Standards Act (FLSA).
Unfortunately, some call centers and business process outsourcing companies are guilty of withholding wages and overtime pay from home-based telephone agents and representatives.
How Do Call Centers Violate the FLSA
Kelly Services, Tech USA, Teleperformance, Concentrix, and Signia Marketing, have all faced accusations they violated the FLSA and withheld wages, overtime, or both from at-home agents. Many have paid out millions in settlements to the employees they cheated.
Some of these violations happen when agents are required to perform certain tasks before or after they officially clock in, or are not compensated for time spent dealing with administrative matters. This includes:
- Starting up their computers, signing on to applications and downloading work instructions
- Shutting down applications and computers after ending their shifts
- Reading work-related emails before and after their shifts
- Attending team meetings before or after their shifts
- Waiting on hold with technical support when disconnected from computer systems and networks
In some cases, agents can spend 30 minutes or more of unpaid time per shift on these tasks and issues. These same employees might also face pressure to not record all the hours they work, or to work off the clock.
Withholding Overtime from At-Home Call Center Reps
Along with forcing at-home agents to underreport their hours, some call centers may also try to avoid paying them overtime. This goes hand-in-hand with pressuring employees to work before or after they officially clock in. That unreported time would frequently count as overtime if properly recorded, as agents often work more than 40 hours a week.
Many employers also attempt to convince at-home employees that the time spent starting up and logging into computers is equivalent to their normal commute time if they had to drive to an office—often called a “virtual commute.” Such an explanation should be a red flag for employees.
Unlawfully Misclassifying Workers As Exempt from Overtime
To duck paying overtime, employers may also give an agent a title that makes it sound like he or she has the duties of a supervisor or manager when, in fact, he or she performs the same tasks as an hourly worker (e.g., Team Lead). This is done so the employer can classify the worker as being exempt from overtime, and violates the FLSA if the employee’s duties are not truly those of a manager or supervisor.
Employing agents who work from home may save call center companies the cost of leasing office space, but they should not also be picking the pockets of those at-home employees. Just because a worker is at home does not mean he or she falls outside the scope of the FLSA.
Home-based call center agents must be paid at least the minimum wage and any applicable overtime. Otherwise, their employers must be held accountable for wage theft and abuse.
Under the federal Fair Labor Standards Act (FLSA), restaurant workers paid by the hour should receive overtime if they work more than 40 hours a week. That’s the law.
Some restaurants, however, try to dodge paying overtime by misclassifying some employees as “management” when, in fact, they are not. It is true that salaried workers in supervisory or managerial positions are sometimes exempt from overtime. But the FLSA has strict rules around who can and cannot be classified as exempt – and it comes down to the exact duties performed.
Not All Managers Are Exempt from Receiving Overtime
A restaurant can’t simply give an hourly worker a title such as “manager” or “assistant manager” to avoid paying them overtime. If that restaurant employee has similar duties as other nonexempt workers – working a till, serving customers, preparing food, cleaning – then he or she is owed overtime. An employee can only be considered exempt if he or she supervises others and has what’s known as “personal discretion” over their work.
FLSA Class Actions Against Restaurants
Many restaurants learn this the hard way. An Arby’s franchise in Florida, for example, currently faces a class action lawsuit on behalf of current and former non-exempt employees. The restaurant worker bringing the suit alleges she regularly worked more than 40 hours a week without being paid overtime because the restaurant misclassified her as exempt. She did not perform any managerial or supervisory duties. Rather, her work consisted of running the cash register, helping customers with orders, preparing food and cleaning. The lawsuit says the Arby’s franchisee owes her unpaid overtime for approximately 870 hours, and seeks compensation for other misclassified workers at that same location.
Also in Florida, a sous chef working for Kona Grill has filed his own class action lawsuit over unpaid overtime. He alleges the chain routinely misclassifies sous chefs and assistant managers as exempt, when they are, in fact, hourly employees and owed overtime. These workers did not have supervisory roles and did not exercise personal discretion in determining their duties.
In April, Carrabba’s Italian Grill LLC was sued in a national class action alleging it, too, misclassified nonexempt restaurant employees to avoid paying overtime. The lead plaintiff in that case, who is suing on behalf of all similarly situated Carrabba’s workers, alleges she often works more than 60 hours a week but never receives overtime. The suit alleges that, though her title was “restaurant manager,” she performed the same duties as a non-exempt employee. As such, she is owed overtime.
Damages in FLSA Misclassification Lawsuits
Plaintiffs in these lawsuits can be entitled to not only their unpaid overtime but also liquidated damages, attorneys’ fees, and costs. The amounts can be significant. Bob Evans Farms paid $16.5 million to settle a suit brought by assistant managers, and Panda Express paid a $3 million settlement to store managers.
Misclassifying employees is a serious problem in the restaurant industry and costs an average worker hundreds, if not thousands, of dollars a year in unpaid overtime. This is tough, demanding work and restaurant employees have a right to be paid all of what they are owed – especially when they sacrifice personal time by working more than 40 hours a week.