In this issue:
- Overtime Suite Hits Financial Sphere for $14 Million
- "Volunteer" or "Work" Time?
- FLSA Cases Continue to Rise
Overtime Suit Hits Financial Sphere For $14
Million
Wage and hour class actions are not limited to retail, manufacturing and food service employers. In the last few years, these lawsuits have quickly found their way into all types of service industries. Many recent examples of this type of case have involved large insurance companies settling very high-profile class actions regarding their adjusters and customer service associates.
Another recent example involved an Arlington, Virginia investment bank that settled two wage and hour putative class actions last month for $14 million. The cases alleged the lender's loan officers, loan processors and account managers worked more than 40 hours per week without overtime compensation and were not allowed to take their required meal and rest breaks during their shifts. They also alleged the lender failed to maintain accurate time records and failed to pay many former employees their wages due upon termination.
The cases were originally filed in the Northern District of California in June 2006 and only covered the current and former employees in California who had worked for the bank at anytime since 2002. By August, however, the cases had expanded to include six other states including Maryland and New Jersey, and three additional categories of employees: branch processors, funders and account executives. The settlement is currently pending approval by the District Court.
Banks and other financial institutions should recognize that these lawsuits are not only a risk for the retail, manufacturing and food service employers that have taken the largest and probably most heavily publicized hit in this constant battle. In an office environment, which is often less physically taxing than other service industries, it is easier to forget that these employees are entitled to breaks and overtime pay for hours worked over 40 per week. Regardless that many office employees may not want to take a meal break in the middle of their day or stop working when their shift is scheduled to end, if they are non-exempt, these requirements still apply, and breaks and overtime pay are required. By remembering the requirements and encouraging supervisors to carefully monitor non-exempt employees for overtime and meal breaks, financial employers can limit the risk of expensive FLSA collective actions.
Financial institution employers should also take a close look at their employees to determine whether they are properly classified. Many exempt bank employees, such as account executives or managers, merely have titles that imply exemptions and may not perform the requisite functions of an exempt employee. The executive exemption requires that the employees' primary functions are to supervise other employees--not customer accounts. Employees who primarily function in customer service, may not perform the requisite tasks to be considered administratively exempt, and their responsibilities should be reviewed to determine whether they should be reclassified accordingly.
"Volunteer" or "Work"
Time?
With the fall and winter holidays fast approaching many public and private organizations begin to consider the charitable efforts in which they will participate in their communities. Some will commit employees to spend time toward a specific charitable goal or activity as volunteers. That makes this a good time to revisit the rules regarding who is a true "volunteer" for wage payment purposes under the Fair Labor Standards Act.
Most workers and employers should know the general rule that there is no such thing as a "volunteer" in the private sector. Said another way, a for profit company cannot have its employees agree to work without pay and label them volunteers to do the work for which they were hired. The FLSA, however, was not intended to stamp everyone an employee who performs some labor even though that person has no expectation or anticipation of being paid.
So a more realistic scenario, and perhaps a complication, is when a group of employees volunteer their time in the name of their employer to work on a volunteer project such as a holiday toy drive or work with the needy. For example, if a group of employees organizes an employer-sponsored park "clean-up," would their time spent in park be compensable? The answer is fairly predictable if they were beautifying the grounds on their own time and not required to participate by their employer. This is a true "volunteer" example where wages would not be due.
But what if the effort - toy drive, shelter work, or bell ringing - is done during work hours? Whether this is truly unpaid volunteer time becomes a bit more complicated. Are the employees required or expected to participate in the effort as part of their job? In this circumstance it is appropriate to fall back to the general rule as to what the worker expects. Generally speaking, as long as the effort is for a charitable purpose, and the employee has no expectation or anticipation of payment, the volunteer efforts can be appropriately considered volunteer time. In those cases where the charitable work is done at the direction and control of the employer, however, it moves closer to compensable work for which the employer may be obligated to pay wages.
Keep in mind that the FLSA in no way discourages volunteer efforts and the regulations specifically contemplate circumstances where workers will spend their time in humanitarian and community endeavors. Employers simply have to be mindful of situations where their sponsored volunteer efforts and events become compensable work time.
FLSA Cases Continue to Rise
Employers weary of the FLSA litigation explosion have no reason to put their concerns aside: 2006 was the busiest year ever for wage and hour filings in the Federal Courts. In the 12-month period ending in March 2006, 4,389 FLSA lawsuits were filed in the Federal District Courts, an increase of 925 from the comparable prior year. Indeed, statistics show that the number of wage and hour collective actions continues to outpace discrimination class actions in 2006.
The U.S. Department of Labor also continues to be busy collecting wages on behalf of workers. In 2006, the Wage and Hour Division collected $135.7 million in back wages on behalf of 247,000 employees for FLSA violations. And while significant DOL attention is focused on low-wage earners in service industries, the government has recently sharpened its focus on white-collar wage earners in a variety of industries, including insurance workers, healthcare workers and securities brokers. These statistics show that no industry is insulated from government scrutiny or potential lawsuits from current or former employees.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.