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Information for workers owed unpaid wages.

Worker Misclassification

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.

It’s Not Just Amazon: Many Companies Allegedly Misclassify Workers to Avoid Paying Overtime

In June, a former Amazon warehouse manager filed a class action lawsuit claiming the online retailer deliberately misclassifies employees in order to avoid paying them overtime.

Michael Ortiz alleges the company hired him and other managers with the promise of a management job, but they were most often given the same manual tasks as hourly workers who received overtime.

Nonexempt and Exempt Employees

The federal Fair Labor Standards Act (FLSA) divides workers into two categories for the purposes of determining who should be paid overtime if they work more than 40 hours a week: nonexempt and exempt. Most states also have wage statutes that make this distinction.

At most companies, nonexempt workers make up the majority of employees. Their work is closely supervised and usually consists of menial or repetitive tasks. They are paid hourly and are owed time-and-a-half if they work more than 40 hours in a week.

Exempt workers are salaried employees who typically spend their time supervising or managing others. They also have the freedom to exercise independent judgment in making decisions involving their work. Employers do not have to pay overtime to exempt workers.

Misclassification of Workers Is Illegal Under FLSA and State Laws

Depending on the industry, overtime can be a significant expense for employers. To avoid paying it, some companies deliberately misclassify employees as exempt when, in fact, they are nonexempt.

This is usually done by giving a worker a job title that sounds like they have management or administrative responsibilities when they do not. Some examples include “assistant manager” or “assistant supervisor.” On paper, it may appear that workers with these titles should be exempt from overtime. However, if the job duties are no different from those of nonexempt employees, however, they are misclassified and must be paid for working more than 40 hours in a week.

Companies Face Class Action Lawsuits For Misclassifying Workers

If a company deliberately misclassifies workers to avoid paying overtime, it is violating the FLSA as well as state laws. In these circumstances, workers may be able to file a class action lawsuit seeking the unpaid overtime they are owed.

Employees should never be cheated out of the wages they have rightfully earned. If you suspect your employer has misclassified your job, denying you overtime, you should consult an experienced FLSA attorney immediately. There may be a time limit for how long you can wait to file a lawsuit seeking compensation.

Former Manager Sues Amazon for Unpaid Overtime

A former Amazon warehouse manager filed a potential class action lawsuit accusing the online retail giant of failing to pay him overtime. In his claim, Michael Ortiz alleges Amazon deliberately misclassified him as an exempt salaried manager when, in fact, his duties were the same as a nonexempt employee. His lawsuit claims this is a violation of California employment law.

California’s overtime rules are among the strictest in the country, with very narrow exemptions. They also place the burden on employers to prove an employee is truly exempt from overtime. Simply giving a worker the title of manager or supervisor is not enough to classify them as exempt under the law if their duties are the same as a nonexempt employee.

This is called misclassification and is also illegal under the federal Fair Labor Standards Act (FLSA).

In Ortiz’s case, he was hired as a salaried manager and promised supervisory-level work. As he told The New York Times, that turned out not to be the case.

“When we were hired, we were told we would be managers working on high-end things,” he said. “In reality, the bulk of the managers got stuck doing very tedious work.”

Ortiz also claims he was injured while performing manual labor, and alleges Amazon fired him as a result.

Misclassification Is Wage Theft

Misclassification is a very common way for companies to try to avoid paying overtime. They often give titles to workers that sound as if the positions involve management duties in order to classify them as exempt from overtime. Too often, however, the job the employee actually performs is no different from an hourly worker who is owed overtime for putting in more than 40 hours a week.

In order to be exempt from overtime, employees must spend most of their time supervising or managing other workers. They must also have significant personal control over how they do their jobs. If these tests are not met, then the workers must be paid overtime.

Misclassified workers may have the right to sue an employer under state law or the federal FLSA. Many companies have faced such lawsuits and paid compensation to their wage theft victims.

Several class action lawsuits involving these kinds of issues have been brought and successfully resolved by a variety of wage abuse victims:

  • Avis and Budget Car Rental managers
  • Burger King coaches
  • Costco managers
  • Family Dollar Stores managers
  • FedEx truck drivers
  • Fox Searchlight Pictures interns
  • Haliburton field service representatives and specialists
  • Kelly Services call center agents
  • Department of Veterans Affairs assistant canteen chiefs
  • Toys “R” Us and Babies “R” Us assistant store managers
  • Uber and Lyft drivers
  • UBS client adviser associates
  • Verizon Communications supervisors

There are time limits for filing such lawsuits, however, and quick action is needed. If you suspect your employer has misclassified your position in order to avoid paying overtime, you should consult an experienced employment attorney immediately.

Eastern District of Michigan Judge Approves $6.5 Million Settlement for Exotic Dancers

On June 20, 2017, in a twenty-five page opinion, a Judge in the Eastern District of Michigan approved a $6.5 million dollar settlement for exotic dancers that performed at the nationwide chain Déjà vu.  At issue in the case, was whether exotic dancers are properly classified as independent contractors or if they are employees of the night clubs.  The Fair Labor Standards Act (FLSA) requires that employers pay each employee minimum wage, something that Déjà Vu did not do because they classified the dancers as independent contractors.  Read the full opinion here.

Settlement with Déjà Vu

The settlement agreement reached will require that Déjà Vu provide dancers with an “Entertainment Assessment Form” in order to ensure the dancer is properly classified as an employee or independent contractor based upon the factors of the economic realities test.  The injunctive relief also requires Déjà Vu to offer each class member the opportunity to cancel their current independent contractor status and accept a position as an employee.  On the other hand, if a dancer wishes to retain their status as an independent contractor they may do so, and Defendants must provide those dancers with the benefits an independent contractor generally recognizes, such as no imposed work schedule.  The independent contractors must also be given the opportunity to vote on some club policies.

In addition to the substantial injunctive relief provided under the terms of the settlement, each class member that opts into the settlement will have the option of receiving a cash payment or credits towards rent or dance-fee payments charged by Déjà Vu.

The Court concluded that “the settlement embodies ‘a fair and reasonable [resolution] of a bona fide dispute over FLSA provisions.”

Restaurants in a Budget Crunch May be Tempted to Cheat Workers

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.

Misclassifying Workers

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.

Unlawful Tip-Pooling

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.