New York Employment Lawyer Blog

We recently posted about when a New York employer can deduct money from your wages. But never fear, the New York courts have often decided that many employer deductions were unlawful. Here’s your handy cheat sheet of recent case New York law on inappropriate wage deductions:

• Charging a server for a customers’ unpaid check – Just because the customer was a jerk doesn’t mean you have to pay for it.

• Credit card tips – New York employers cannot take your tips away, whether if it was given through cash or a credit card.

• Required tools – Unlike clothing and transportation costs, you are not required to pay for tools you are required to use.

• Legal fines incurred for messing up on the job – A waitress was not required to pay fines her employer received because she sold alcohol to an underage patron.

• Loss of profits for poor performance – Unfortunately for your employer, it can’t take its frustrations of bad business out on you or the quality of your performance.

• Damages to a leased company vehicle - Even if the damage may have allegedly been caused by you, your employer cannot deduct the damage from your wages. But it can deduct the fees associated with the vehicle.

• Travel expenses outside of your normal commute.

These are just a handful of situations in which employers were not allowed to deduct costs from their employees’ wages or require the employee to pay for the costs themselves. If you are concerned that your wages may have been deducted unfairly by your New York employer, contact The Ottinger Firm for more information about ilegal wage deductions. We can help answer any questions you may have regarding wages or any other New York employment law topics. You can also visit our website for more information on New York employment laws.

You work hard for your money, so hearing that New York employers can take your money away for various reasons may not be something you want to hear. Luckily, we have a handy cheat sheet of recent case law on appropriate deductions New York employers can take from your wages:

• Improper Determinations of Tardiness – You may have been on time to work and were unfairly accused of being late, but the wage deduction won’t be considered improper.

• Severance Pay – Regardless of whether you signed a waiver or not.

• Fees Associated with Vehicle Leases – If you agreed to the deduction and the use of the vehicle was necessary for employment, your employer can deduct the fees.

• Franchise fee payments.

• Clothes or Transportation Required for the Job – Work for Abercrombie or the Gap, and you’ll have to wear their clothes on your own dime. You also can’t get reimbursed for the money you spend on the Subway or for a New York taxi to get to and from work.

The following two items won’t even be considered deductions at all:

• Money Entrusted to You that You Lost – It was entrusted to you to keep, and it’ll come out of your pocket if you lose it.

• Mortgage Payments to your Employer Bank – If your employer, a bank, demands early repayment on a mortgage it gave you, it is “clearly” not considered a wage deduction.

If your wages have been deducted and you are concerned that it was done unfairly, contact The Ottinger Firm for more information about appropriate wage deductions. We can help answer any questions you may have regarding wages or any employment law topics you may have questions about.

Whether weekly, bi-monthly or some other cycle ask any New York employee and they will tell you that pay day is always a good day. But what happens when the numbers of the pay check don’t look the same as the amount you were expecting?

New York wage deductions are taken out for items such as: state and federal taxes, health care, stock options and other payments. Although most of these deductions are part of your benefit package, the shock of the cumulative effect remains the same.

There is a lot of talk about New York wage deduction laws that have a substantial impact on the amount of money you take home every month. Limitations provided for in Section 193 of the New York State Labor Law does not apply to public employees so unless you fall into that category, keep reading! When it comes to legal wage deductions there are five basic categories allowed in New York:

1. Healthcare: wage deductions made for the payment of insurance premiums is not only legal but likely a plan that you had an active part in devising.

2. Pension: 401K contributions, retirement accounts and other types of health and welfare benefits fall under this deduction allowance. And with the full awareness of sounding cliché, you are saving for your future under this category.

3. Charity: Contributions to charitable organizations are lawful deductions that may or may not apply to you as an employee.

4. United States Bonds: Good luck arguing against this one! United States bonds are a legal deduction in all 50 states.

5. Labor Organization Payments: If you are a member of a labor organization, then you are making payments on whatever basis is dictated by the organization.

One other general category to keep in mind is that if you have agreed to certain other deductions, then you have agreed to them and will need to revisit the issue with your employer if it is something that needs to be changed.

The good news is that a lot of these deductions, although they may seem like a financial hit, are a direct benefit to you as an employee. The bad news is there are a lot of situations where an employer is making illegal deductions. If you think that is the case, give us a call.

Call center employees are unquestionably entitled to overtime pay, yet they are among the most stubbornly undercompensated groups of overtime-eligible employees. While many companies have relocated their customer service call centers abroad to India and other countries to avoid minimum wage and overtime laws, many remain in the US and their owners simply flout these laws. Aside from not receiving overtime compensation for hours worked in excess of 40 in a work week, many call center employees are simply not paid for all compensable hours whether they work over 40 hours in a week or not. In fact, call center employees are often not compensated for purported "off the clock" workday activities such as routine bathroom breaks or time spent waiting between customer service inquiries, despite the fact that the Department of Labor considers this time to be compensable.

Payroll deductions for lost or damaged company property is common, but it is prohibited by the New York Labor Code and the Fair Labor Standards Act.  Companies that dock pay or make payroll deductions for lost or damaged property, business losses or overhead expenses are playing with fire because there are two harsh penalties that can apply.

The first penalty that applies to unlawful payroll deductions is under the New York Labor Code.  The NY Labor Code specifically prohibits any deductions from an employee's wages unless that deduction is for the benefit of the employee such as paying for health insurance or some other employee benefit.   If a company does make a deduction from an employee's wages for lost or damaged property, business losses or another illegal expense, then the employee can sue under the NY Labor Code to recover the amount deducted and penalties equal to the amount deducted so the employee can recover twice the amount deducted plus all legal fees and costs incurred.   Illegal deductions can come in many forms.   I just met with employees of a cell phone retailer that had a list of payroll deductions which were all illegal.   The company would charge employees $100 for being late to work, $50 for errors in closing the stores and deduct for all lost, stolen or damaged merchandise or store property.   All of these deductions are illegal under the NY Labor code, yet the company has been making these deductions for over 6 years.

The second penalty that can be imposed on companies for docking pay can be far worse but it is a little more complex.   This penalty arises from the Fair Labor Standards Act and it provides that any company that makes unlawful payroll deductions can automatically lose its exempt status from the overtime pay rules for the employee category in question.   Losing an exemption can be a big loss for a company because it means that the company now owes the subject employees overtime pay retroactively.   For example, outside sales employees are normally exempt from overtime pay - this means that the company does not have to pay it's outside sales force for all of the overtime hours they work - this can be a huge savings for the company because outside sales people routinely put in long hours traveling.   However, if a company makes illegal payroll deductions from its outside sales force for lost or damaged cell phones, laptops, company cars or for any kind of company  losses or expenses, the company can lose the exempt status and be forced to pay its sales force for all of those overtime hours.   This could result in substantial liability for the company.

Companies that engage in illegal payroll deductions from wages or commissions are taking a big risk.   Employees are protected by two every strong laws that can impose large penalties.  If your employer is making deductions from your paycheck for losses or damages of any kind, you might have a case.   Please give us a call at 866-571-5010 if you would like to discuss your case.

Overtime pay should not be a concern for mortgage brokers, who have larger problems to deal with. Mortgage defaults are at record rates and the employment picture is particularly bleak in the industry. However, a series of recent rulings have opened the door to overtime eligibility for a broad number of housing/mortgage industry employees, including mortgage underwriters and loan officers. In 2009, the Second Circuit Court of Appeals in Whalen v. J.P. Morgan Chase held that underwriters responsible for approving loans did not engage in exempt administrative work. Earlier, the Department of Labor had reached a similar conclusion with respect to "typical" mortgage loan officers, reasoning that loan officers were primarily engaged in the sale of financial products and therefore protected by federal overtime law. Since much of the industry is misclassified, and since the Department of Labor is actively pursuing employers, employees should be particularly cautious of retaliation should you chose to raise the matter with management.

If you are employed as an unlicensed Junior, Associate, Senior or Consultant Accountant at one of the large accounting firms, or if you are a junior accountant or accouting clerk in any corporation, your employer may be violating the FLSA and state overtime laws by not paying you time and a half for all hours worked over 40. In Kress et al. v. PricewaterhouseCooper, Judge Karlton in the Eastern District of California preliminarily certified an FLSA collective action comprised of Associate and Senior Accountants who were not licensed as Certified Public Accountants. This fact bodes well for those at other accounting firms who are employed in similar positions and are contemplating bringing suit for unpaid overtime. Also, many large corporations violate the FLSA by employing closely supervised "financial accountants" who are not CPAs, perform mostly clerical accounting, and who earn a salary without eligibility for overtime compensation. These violations are particularly egregious given the long hours these accountants are known to work. Also, since the law is developing in favor of paying these employees overtime, it will be difficult for employers to argue that violations are not willful and therefore subject to additional penalties under the FLSA.

The New York Labor Law prohibits the deduction of any costs or expenses from an employees wages unless the cost is for the benefit of the employee.   Lawful deductions would include health insurance premiums, pension contributions or the like because these are for the benefit of the employee.   Any deduction from wages for losses, breakage, or business operating costs are prohibited.

Even though the law is clear, companies still deduct illegal costs such as business operating costs and losses from their employee's wages.   Right now my law firm is handling a case in which a company deducted about 5% from each person's pay check to cover general business operating costs.   This is illegal and we are suing the company to recover these deductions along with interest and penalties provided by the New York Labor Law.

We handled another similar case in which business losses were deducted from sales commissions.   In that case, salespeople sold loans to small business owners.  If the loans were not paid back, the company would deduct a percentage of the unpaid loan from our client's commission payments.   We sued the company and won. The company was forced to pay back all of the illegal wage deductions. The New York Labor Law also imposes penalties and interest and the payment of attorneys' fees.

If your employer is deducting expenses or losses or other illegal costs from your pay, give us a call at 866-571-5010 and we will help you determine if those deductions are legal.  If they are illegal, we can recover those deductions.  We have been helping employees since 1999. Use our FREE CASE REVIEW.

We have been getting calls from store managers around New York who are working long hours and they want to know if they are entitled to overtime pay. Many of them claim to do very little "managing" and instead spend the bulk of their time doing menial labor such as stacking boxes, pumping gas, sweeping floors etc... At first glance it seems that since most of their time is spent on non-exempt work that these managers are not exempt. But this is not always the case.

I was doing some research on this issue and found a great blog post by Greg Mersol of the Employment Class Action Blog that really explained the issue well as it relatses to a recent decision from the Northern District of New York. Here it is:

In Guinup v Petr-All Petroleum Corporation.pdf. (case 5:07-CV-1120, 8/23/2010) the plaintiff was the manager of a combination convenience store and gas station. She asserted both federal claims under the FLSA and class action claims under the New York wage and hour law, claiming that the company misclassified all of its retail outlet managers. She made many arguments in support of this contention, including, for example, that she was required to perform numerous nonexempt duties such as counting cigarettes, verifying gas readings, monitoring security tapes, comparing prices as nearby gas stations, and working alone at times.

Interestingly, the plaintiff withdrew her class allegations early in the case as part of a compromise regarding a motion to dismiss filed by the defendant. The court thus technically ruled on her individual claims on the defendant's motion for summary judgment, although its reasoning theoretically would have applied to the class of store managers as a whole. The court accepted the plaintiff's description of the nonexempt duties she performed, and even her argument that she performed such duties 80 percent of the time, but noted that she also performed numerous exempt duties such as evaluating employees, scheduling, and supervising other employees. It noted that while her performance of nonexempt duties was helpful to the store's operations, and quite possibly filled the bulk of her time, her managerial functions were more important. As the court reasoned, the store largely could not function well, if at all, were she not there to perform the exempt managerial duties. It further found that despite the existence of regional supervision, she spent most of her day free from direct supervision because the regional manager generally was not in the store. Therefore, the court found, the managerial duties were the “primary” duties as a matter of law, and entered judgment for the defendant.

The Bottom Line: Even in small individual retail operations, and even when the amount of time spent strictly managing the store is relatively small, managerial duties or often still the primary duties and will support the executive exemption.

So, in New York, many of the store managers for smaller operations may well be exempt from overtime pay. Even though they spend most of their time on non-exempt work, they are still exempt. But each case is different and dependent on the facts of the position.

A common defense to claims for unpaid overtime is the argument that overtime pay is not required because the employee's position falls within the administrative exemption. The overtime laws "exempt" certain kinds of jobs or positions such that overtime pay is not required. Employees who fall into the "administrative" exemption are not entitled to overtime pay. But as a federal judge told us in court today, the Second Circuit takes a narrow view of the administrative exemption argument. Therefore in New York, the administrative exemption is reserved only for those positions that squarely meet the standards.

But what exactly is the "administrative" exemption? First, an administrative position must directly relate to the management or general business operations of the company or the employer's customers. This means that the job must involve assisting with the running of the company as opposed to creating the product or service offered by the company. Classic administrative positions are marketing, compliance etc - jobs that involve the running of the business itself.

Second, in order for a position to fall within the administrative exemption, the job must also involve the exercise of independent discretion or judgment. For example, the position must involve fairly high level decision making that might involve advising the company on important matters or making plans for the companies near or long term goals or negotiating and binding the company with respect to significant matters.

So what does all of this mean? Basically it means that a job falls within the administrative exemption if the work involves the running of the business such as marketing and that the marketing position itself is a high level (non-routine) position that involves making important decisions and rendering advice and the like. Low level routine or clerical positions do not qualify. The courts in New York will closely scrutinize these administrative exemption arguments as the Second Circuit has recently reversed a trial court for erroneously determining that certain pharmaceutical sales representatives were exempt under the administrative exemption.

Employees in California enjoy a few protections that New Yorkers don't have. For example, noncompete agreements are generally unenforceable in California. This means that Californians have more freedom to move from job to job while New Yorkers can be restricted. Mark Hurd, the former CEO of California tech giant Hewlett-Packard recently exercised this freedom when he left HP to join HP's rival, Oracle. HP tried to stop Hurd but it was unable because California courts typically refuse to hinder an employee's ability to change employers. If Mr. Hurd was employed in NY, he most likely would have been bound by an enforceable noncompete clause that would have prevented him from joining a competitor.

Likewise, California employers are required to reimburse employees for necessary expenditures or losses that they incur in the performance of their duties under California Labor Code section 2802. NY employees do not enjoy this protection. We are currently handling an expense reimbursement case in California. The case is entitled Brian Mas v. Cumulus Media, Inc. That case is a putative class action and it is alleged that Cumulus Media did not reimburse is sales executives for the business expenses that they incurred in the performance of their duties in violation of California Labor Code section 2802. It is alleged, among other things, that Cumulus sales executives incurred expenses in traveling to meet with potential and existing clients and in entertaining clients. California law also makes it clear that an employee cannot waive their right to reimbursement as section 2804 of the Labor Code voids any such agreement.

A frequent question from clients seeking advice on negotiating severance is whether or not severance payments effect unemployment benefits eligibility. In New York, a claimant is usually eligible for unemployment insurance benefits while receiving severance payments. However, a claimaint will not be eligible for benefits if he or she continues to receive the full salary and exactly the same benefits that he or she received while working, with the understanding that the salary and benefits will stop if he or she becomes employed elsewhere. In other words, the method your employer chooses to pay your severance could impact your eligibility for benefits. If your severance is paid as salary, and if it is subject to forfeiture in the event that you find employment during the severance period, you will not be eligible for unemployment benefits.

If you are one of the thousands of medical case managers, or disability case managers, working for large health plan companies throughout the US, you should keep close tabs on the case of Ruggles v. WellPoint, Inc., No. 08-cv-00201, because the case is likely to have an enormous impact on the industry, your profession and, if the plaintiffs prevail, your own pocketbook. Ruggles and the putative class are seeking to certify a class of misclassified nurse case managers who work in call centers collecting documents and data requested by claims adjusters. According to the Ruggles complaint, the nurse case managers receive a salary and are misclassified as exempt from overtime requirements under federal (FLSA) and NY state law (NYLL).

Often, registered nurses are hired for these positions since their nursing experience is useful for interpretting medical data, but they do not provide "traditional" direct medical services to patients, render an opinion or make any medical diagnosis (which is prohibited by state law). Traditionally, registered nurses qualified for the “learned professional” exemption to FLSA overtime requirements under 29 C.F.R. § 541.301(a). According to the regulations, to qualify for the exemption, an employee’s primary duties must require consistent discretion and judgment. See id. § 541.301 (b). The regulations further state “[r]egistered nurses who are registered by the appropriate State examining board generally meet the duties requirements for the learned professional exemption.” See § 541.301(e)(2). The central inquiry in Ruggles is whether or not nurse case managers who are, for all intents and purposes, not using traditional nurse skills and training still qualify for the exemption. Certain Wage and Hour opinion letters suggest that registered nurses who are not expected to utilize "traditional" nursing skills and instead rely on company manuals to perform administrative services, or who do not need a nursing degree or license to qualify for employment, do not exercise independent judgment and do not qualify for the exemption. Our firm intends to file a complaint next week against one of the largest health care companies in the US seeking to certify a class of disability and medical case management nurses for overtime violations. According to our client, a social work degree and other non-nursing degrees are suitable qualifications for employment as disability or medical case manager. Also, our client was urged by her managers to perform case management services in states other than those she was licensed in as a nurse. If you are in a similar situation, call for a free screening. This appears to be the next big thing in overtime litigation - the big defense firms are already issuing scary "client alerts" to notify (i.e. frighten) potential management clients of the litigation timebomb that awaits them if they don't rapidly retain counsel and reform their policies. This is a telltale sign that a massive wave of litigation is on the horizon.

I was recently reprimanded by my wife for checking my work email at a wedding. She said it was rude and she was right.

As if on cue, my wife, who is also a lawyer and works for a low-tech government office which only allowed for external email four years ago, was issued a blackberry last week by her supervisor. Now she is one of many lawyers carrying two smart phones. My poor manners aside, there are virtually no social limitations on smart phone usage, including usage of smart phones for professional purposes.

Should you be paid for the time spent on your blackberry? Of course. Check out this NPR article on blackberry usage and overtime. Under the FLSA, time spent communicating with your employer or otherwise working on your crackberry is compensable. If you are a non-exempt employee who spends a tremedous amount of time on your blackberry and feels...well...instinctively undercompensated, you're probably right. Don't rest on your hunch, call for a free screening.

I have screened hundreds of overtime cases. In my practice, the following three categories of nonexempt employees under the FLSA are the most blackberry dependent, misclassified and undercompesated (i.e. abused):

1. IT employees, including help desk employees and systems engineers;
2. Pharmaceutical sales representatives;
3. Staffing recruiters (incredibly long hours and hard work - hats off to these employees - case law says you should be getting OT if you aren't involved in project management and post-recruitment supervision).

Smart phones are embedded in the culture. My 3 year old is adept with my iphone; she knows how to find the games she likes and will undoubtedly be asking for one before she is 10. Frightening. There's no turning back. However, you should not let your employer abuse the popularity of these phones by discounting the time you spend on them. Use your blackberry to call for a free screening.

Employers have a motive to improperly classify employees as independent contractors. Unlike employees, independent contractors are not entitled to overtime pay or minimum wage. Also, employers are not required to pay payroll taxes, reimburse the worker for business expenses, provide workers compensation insurance and they are not responsible for making payments to social security, disability or unemployment insurance. Companies are clearly better off if a worker is classified as an independent contractor. Workers, on the other hand, are better off being employees than independent contractors.

This begs the question - when is a worker legitimately classified as an independent contractor?

First, in most states, there is a presumption that a worker is an employee and not an independent contractor. In making the ultimate determination of whether a worker is an employee or an independent contractor, the driving factor is whether the company has control, or the right to control, the worker regarding the work being performed and the manner and circumstances under which the work is performed. If the company controls the manner in which the work is performed such as the time, place, equipment, and manages the day-to-day activities of the worker, then the worker is an employee. Depending on the case, other factors may also be considered such as:

1. Whether the work being performed is part of the regular business of the company;

2. Whether the work performed requires a special skill;

3. Whether the work is a short term temporary project or long term;

4. Whether the worker is paid by the job or based on time expended;

5. Whether the worker is engaged in a business that is different from that of the company; and

6. Whether the worker or the company owns the equipment used to do the work;

7. Whether the worker of the company provides the location or facility for the person to do the work;

These are factors that often considered in determining if a worker is an employee or an independent contractor. Even if there is an lack of complete control over the work, an employee-employer relationship will be found if (a) the worker's duties are an integral part of the operation, (b) the company has pervasive control over the operation generally, and (c) the nature of the work does not require detailed control.

Improper classification of workers as independent contractors is common and workers stand to lose benefits and overtime pay. If you believe that you have been improperly classified as an independent contractor, you should contact an employment lawyer or the Department of Labor.

IT and high tech workers are often entitled to overtime pay and some have recovered millions in back wages recently. If you work in IT or high tech and are wondering if you are entitled to overtime pay, you should consider the key factors that drive these cases. There is a general exemption that excludes some IT and high tech workers from receiving overtime pay, but it is a narrow exemption.

First, IT and high tech workers are often entitled to overtime pay even though they are salaried and well paid. You method of payment and title are not important. You are probably entitled to overtime pay if these factors are met:

- You are supervised and required to follow rules
- You are required to follow company procedures and protocols in doing your work
- You perform repetitive tasks
- You maintain existing computer systems
- Your work does not involve the design or creation of new systems or programs
- You do not work independently

In addition to these factors, you are likely to be entitled to overtime pay if you perform specific tasks such as installing software updates, configuring settings on systems and applications, and otherwise perform work that is geared to maintaining existing computer systems or helping users with routine trouble shooting and repairs.

However, if you generally do not work under close supervision and you work independently and focus on designing or creating new systems and applications or engage in long term research projects, then you may not qualify for overtime pay. The laws that require overtime pay apply to workers who perform routine or day-to-day upkeep and repair of existing systems.

If you are an IT or high tech worker and think that you may be entitled to overtime pay, give us a call and we will be happy to discuss your case to help you determine if you are entitled to overtime pay.

Do you ever find yourself performing work "off the clock" simply because your employer tells you that you must? You are not alone. Off the clock work is as American as apple pie. Fast food restaurants often require managers to perform scheduling and "shift change" activities such as register counts off the clock following the conclusion of a shift. Here's the catch - 10 minutes a day for a year adds up. If you believe that you are performing tasks without compensation, you should contact us for a free screening.

The Fair Labor Standards Act, and the Portal to Portal Act which followed, set limitations on "preliminary or postliminary activities" which are compensable under the FLSA. The Supreme Court has addressed this issue many times, most recently in 2005 in IBP v. Alvarez and Tum v. Barber Foods. In these cases, the Court addressed the question of whether or not "donning and doffing" equipment prior to and after the "principal activity" of an employee's work is compensable time. The Court held that donning and doffing gear that is "integral and indispensable" to employees' work is a "principal activity" under the FLSA, and that the time spent walking to and from the worksite after donning and before doffing, as well as the time spent waiting to doff, are compensable under the FLSA.

More often than not, employees who are required to wear heavy protective gear - HAZMAT employees and production line employees, for instance - are required to punch in after suiting up and getting to work. If you are one of these employees, find a lawyer and advocate for payment of your unpaid wages. If you are working a 40 hour week, the uncompensated "donning and doffing" activities may be compensated at overtime rates.

Here is the single greatest myth in today's workplace:

"I am not entitled to overtime pay because I am a salaried employee."

Employees across the nation are being duped by the millions. People who are legally entitled to overtime pay for their extra work are being ripped off. Salaried employees are entitled to overtime pay. The fact that a person is paid a salary is irrelevant.

Under the overtime pay laws, each employee is presumed to be entitled to overtime pay. Certain kinds of employees are exempt from the overtime pay laws. Typically, these three kinds of employees are exempt from overtime pay:

- Professional employees such as doctors, lawyers and other over-educated pinheads
- Executive employees such as managers or top level company officials
- Administrators who handle key company operations

Those are the three major categories of exempt employees. There are other specific exemptions that apply to certain trades such as truck drivers, certain computer workers or student nurses. Here is a table of overtime exempt jobs in California. But other than those listed as exempt, the law assumes that employees are entitled to overtime pay.

The fact that an employee is paid a salary is generally irrelevant. But, a myth has been created in the American workforce and most people who are paid a salary believe that they are not entitled to overtime pay. This misunderstanding saves corporations millions and cheats American workers out of their pay. It is wage theft - stealing money that is earned and owed to the workers who put in the hours.

In a major set back to banks and finance companies, the U.S. Department of Labor recently held that mortgage and loan officers are entitled to overtime pay. This reverses a long standing policy that mortgage loan officers were exempt from overtime pay under the administrative employee exemption of the Fair Labor Standards Act. But on March 24, 2010, the U.S. Department of Labor reversed course and held that loan officers are not exempt from overtime pay.

This is great news for loan officers around the country. For years, loan officers had a tougher time bringing overtime pay cases because they were often considered exempt from the overtime pay rules. But courts lately have been finding that employees who are deemed "production" workers no longer qualify for the administrative exemption.

The Department of Labor found that loan officers in reality are mere production workers who help sell loans. The Department found that loan officers do not manage the business or otherwise qualify for the administrative exemption.

Late last year, our firm received a telephone call from an administrator employed by a hospital in New York State. The call was particularly memorable because the caller was frantically racing to finish the case screening - she had to return to her desk within 10 minutes or her absence would be noticed and dispparoved of by her supervisors. She told me that she was expected to work around the clock, including through her lunch and rest breaks, without any overtime pay. I asked her how many others were not receiving overtime and she seemed puzzled; nobody was getting overtime, she told me. We did a quick calculation and determined that over 100 employees were owed about $20,000 each. She was terrified of retaliation from her employer, and never called back after our intial call.

I've thought of this caller often - she was truly terrified of her employer - and wondered why we don't get more calls from health care workers. Apparently, it is not for a lack of wage and hour violations. The New York State Department of Labor recently launched a wage and hour enforcement intiative aimed at the health care industry, noting that nearly 65% of health care employers in New York who had been investigated in the last five years were not in compliance with federal wage and hour laws. If this is the case, the restaurant industry may have stiff competition as the most FLSA noncompliant industry.

One of the biggest obstacles to negotiating severance pay is workplace misconduct. Typically, if misconduct is discovered by your employer, even if you are being let go for reasons unrelated to your performance, you will not be eligible for severance pay.

If you failed to pass on a benefit to your employer (i.e. if you pocketed or diverted company funds) or if you competed with your employer during your employment, you should not expect any severance pay. In fact, you should find a lawyer, because you could be sued by your employer for breaching your fiduciary duty. Moreover, if you were repeatedly disloyal throughout your employment, your employer has the right to seek disgorgement of compensation, including salary and bonus, for the periods during which you were disloyal. This rule, known as the faithless servant doctrine, is extremely harsh. It extends to almost any breach of an employee's fiduciary duty, including mere breaches of confidentiality, and does not require proof of harm to one's employer. Also, if you are paid by your employer in installments which are not task based, the court will not distinguish between which portions of your compensation were paid in violation of the faithless servant doctrine - you will have to pay all of your salary back for the period of disloyalty.

If you have been disloyal to your employer, and if your employer is aware of it, being denied severance pay may be the least of your worries. Many employees assume that competing with one's employer is merely terminable but not unlawful. The average employee misundertands the risks of unfaithfulness - don't fall into the trap.

Are you employed in Florida and wondering why you aren't getting overtime pay? Get in line. Florida led the nation in FLSA lawsuits in 2009 with over 2000 filed. That's 37 wage and hour lawsuits a week in the sunshine state. There's a number of different theories about why so many FLSA lawsuits are filed in Florida, but I haven't found any of them to be convincing. My theory is that since there is no state wage recovery statute in Florida the only remedy for employees deprived of wages is the federal court and the FLSA.

I recently spoke with another plaintiffs' side employment lawyer practicing in Florida about the increase in FLSA lawsuits in his district and he groaned. As it turns out, the federal bench in Florida has grown weary of these lawsuits and perceives most of them to be abusive. In fact, the Middle District of Florida requires all FLSA litigants to answer judicial interrogatories immediately following the filing of a lawsuit in an effort to quickly resolve these cases.

Another possible reason for the FLSA litigation explosition in Florida - timeshares sales. In a January 25, 2007 opinion letter, the Department of Labor determined that on-property timeshare salespeople are nonexempt employees under the FLSA and are entitled to overtime. There are thousands of timeshares sales employees in Florida who may have only recently become aware of their entitlement to overtime.

If you are one of the Florida residents cheated out of overtime, call us for a free screening to determine your rights.

Are employees in small companies protected by the FLSA and therefore entitled to overtime pay? Most busineses, even small businesses, are required to comply with the FLSA. The FLSA protects employees working for an "enterprise" which employes more than 2 people and makes over $500,000 in gross annual revenue. This brings most small compaines within its protection, including small mom and pop restaurants, grocery stores and pharmacies.

Lawsuits against smaller companies for unpaid overtime are on the rise. See this article for examples of this trend. Some smaller companies simply can't afford to pay employees overtime and willfully violate the law. Other companies are ignorant of the law and negligently misclassify workers. The former are subject to greater penalties for willful violations, but attorneys' fees can be assessed against either category of violator. If you are an employee at a small company and think you are being deprived of overtime compensation, you should call for a free screening to determine your rights.

Overtime pay theft is rampant with some reports saying 19 billion per year in overtime is stolen. What is the reason for this stunning statistic? Why are so many people losing so much money to overtime wage theft? The answer is simple. Companies know that the Department of Labor, the government branch that is supposed to protect workers, is a worthless do nothing government agency. Studies have found that calls for help are not even returned by the Department. In fact, as part of an investigation into the Department's neglect, a caller reported child labor abuses with children being forced to run saws in a meat packing plant during school hours. The call was not even returned. The government does not protect workers and that is why overtime is not paid. See this article explaining in more detail.

Since the government is broken, this means that the private sector has to do the job. It seems like every employment law firm is getting into the overtime pay business. More law firms are needed to help protect workers from overtime pay abuses. Our employment law firm has an office San Francisco and New York City to handle these cases.

Fed up with forced overtime work and no overtime pay?   Workers in Mexico decided to burn the factory down.   Read about it here.

We had an inquiry today from a commercial truck driver. For two years, he made interstate deliveries to a single retail store that sold the goods. The delivery required a 14-hour roundtrip that he made five days a week - for $220 dollars a day. I nearly hit the floor.

It's not easy being a commercial truck driver, and the overtime laws don't help matters at all. Basically, if you are a delivery driver and ship goods in interstate commerce, you are not entitled to overtime. In fact, if you are distributing goods from a warehouse to outlets in the same state, but the goods themselves originated out of state, you are also not entitled to overtime.

Based on my experience, there are only three situations where commercial drivers may be able to demonstrate an entitlement to overtime under the FLSA. First, if your truck has a gross vehicle weight of less than 10,000 pounds, you will be eligible for overtime whether or not you haul goods in interstate commerce. Second, if the goods you haul are manufactured and distributed in a single state, you will be eligible for overtime. This is an uncommon occurrence, but not totally unforeseeable, especially in large states such as California. Third, if you deliver out of state goods, regardless of the size of your haul, from an intermediate in-state storage point and distribute the goods to local retail outlets without a "fixed and persisting transportation intent" to deliver the goods to identifiable retail outlets from the time of out-of-state shipment, you will qualify for overtime. In other words, if you deliver out-of-state goods to an in-state storage warehouse and then distribute the goods to a local retailer, you will qualify for overtime if no fixed destination existed from the out-of-state origin of the goods. For example, if you are a parts runner for an automobile sales franchise that requests replacement parts and sends you to retrieve them from a local warehouse, you will qualify for overtime compensation even if the parts originated from out-of-state and they were not intended for any dealership in particular.

Whew.

If you are a commercial driver and suspect you are getting the shaft, call for a free screening. The law is still very unclear and employers will likely exploit the ambiguity.

An interesting ruling out of the Third Circuit this past week clarified the boundaries of the FLSA's "learned professional" exemption in a decision involving the classification of pilots. The opinion follows a confusing non-opinion opinion issued by the U.S. Department of Labor which articulated a "nonenforcement position" with respect to the exempt status of pilots. The Third Circuit Court of Appeals in Philadelphia in Michael G. Pignataro; Thompson R. Chase vs. Port Authority of New York and New Jersey affirmed a New Jersey federal judge’s decision granting summary judgment in favor of the pilots holding that they were not exempt employees under the professional exemption. Since the pilots’ knowledge and skills were acquired through experience and supervised training as opposed to intellectual, academic instruction, they did not qualify as "learned professionals." According to the DOL, recognized "professional" occupations include law, medicine, theology, accounting, actuarial computation, engineering, architecture, teaching, pharmacy, various types of physical, chemical, and biological sciences. A bit of intellectual hogwash? Maybe. But if you're a pilot and now $87,000 richer following reimbursement of unpaid overtime, it may not matter.

And how are theologians paid, anyway? When exactly is a theologian off the clock? Sounds like a tough case for an employer.

I have screened plenty of calls from the recently terminated, and by far the most common inquiry involves a separated employees’ right to accrued vacation pay. My answer – it depends. If your employer has a monthly vacation accrual policy, you are entitled to a prorated share of your annual entitlement based on the number of months worked prior to your termination. However, many employers include disclaimers which nullify the benefit upon termination. Look closely for these policies – if they are in your employment manual, you don’t get anything.

This is not a matter of pocket change. Some generous employers allow for rollover of vacation days, and employees can accumulate a substantial reserve of accrued vacation days. I have a friend who made a down payment on an apartment with his accrued vacation cash out. Don’t leave any money on the table. Accrued vacation time should be the first benefit you seek in your severance payment negotiation, followed by any unpaid overtime wages.

One of the dirtiest tricks out there is the so called “overtime waiver.”   Some sleaze bag companies have their employees sign an agreement giving up their right to be paid overtime pay.   It looks legal and sounds legal.   Hey, it is a contract so it must be valid – that is what everyone thinks.  But don’t be fooled.  That agreement is a sham – bogus – practically criminal.

The law is clear – an employee CANNOT waive his right to overtime pay.   If your company had you sign one of these overtime waivers then you are probably working for a sleazy company.   Ignore that waiver – burn it – it means nothing.   You have the right to overtime.  

Just so you know, we see these waivers all the time.  Companies do it a lot – why – it works.   Most employees get tricked into thinking that they do not have the right to overtime pay.   Pretty slimy.   Don’t fall for it. 

Yes, in New York your employer can require that you work overtime.   In fact, your employer can even discipline you if you refuse to work overtime.   The law only requires that you be paid time and half for each hour of overtime that you work, but you do have to work overtime if asked.    You can refuse to work overtime, but then your employer is free to fire you.  If your employer requires overtime from you, you either have to do it or risk being fired.   If you don’t want to work overtime, your best bet is to find another job – one that will not require overtime.  

Yes, salaried employees are often entitled to overtime.   People frequently assume that overtime pay is only for hourly employees, but this is wrong.   Being paid a salary is not a factor – what matters most is the kind of work you do. 

A salaried employee, like an hourly employee,  must be paid overtime unless they meet the test for exempt status as defined by federal and New York state laws.   So – the easy answer to this common question is that being paid a salary is not a factor.   Do not assume that you are not entitled to overtime pay just because you are paid a salary.   You may be entitled to overtime pay. 

Yes, New York law requires that employers pay overtime, whether authorized or not.  The overtime rate must be one and one-half times the employee's regular rate of pay for all hours worked in excess of 40 hours in a workweek. 

An employer, however, can discipline an employee if he or she violates the employer's policy of working overtime without the required authorization.  So the bottom line is that you must be paid overtime even if your company did not approve it.   But, your company can discipline you for doing this.  

Tom works for a company in Brooklyn that is struggling financially. Tom is being asked to work 15 to 18 hours a day and also on weekends. He is exhausted and his wife called and wanted to know if there was a limit on how many hours a person can be asked to work.

She was amazed when I told her that there is no limit. The law does not provide any limit on how many hours a person can work in a day or a week. The only real regulation that controls are the overtime laws and these do not limit how long you work, it just provides for extra pay for long hours. Under the New York and Federal overtime rules, a person must be paid time and half for each hour worked in excess of 40 hours per week.

In New York, employees are not entitled to be paid for holidays, sick time or vacations. Also, there is no rule requiring extra pay for working on a holiday. Some companies, however, have policies that provide employees with pay for holidays, sick time and even vacation pay. If your company has such a policy, you then have the right to be paid according to its terms. But, under the law in New York, you are only entitled to be paid for the time that you actually work and for overtime pay for each hour worked in excess of 40 per work week.

Lately we have had a few managers contact the firm to ask if they are entitled to overtime pay.   Here is the answer. 

First, someone who is truly a manager is not entitled to overtime pay – they are exempt from the law that requires overtime pay. 

The real question then is when is a manager really a manager?  Companies routinely label people as managers just to avoid paying them overtime.   So be careful – you might be entitled to overtime pay even if your title includes the word “manager.”   Here is the rule.   A person is truly a manager if:

1.  You are paid at least $23,660 a year or $455 per week

2.  Your main job is to manage some part of the company

3.  You supervise/manage at least two full-time employees

4.  You actually do the hiring and firing of the people you manage or play a major role in those decisions. 

If any one of the above is missing from your job, then you are not a manager and you are therefore entitled to overtime.  If you have the title of manager, but do not meet the criteria above, you may have the right to recover unpaid overtime.  

I recently was involved in hiring a nanny and spent the better part of two days trying to structure her compensation. Ok, my wife did. I was eating cookies and playing with my kids.

Bottom line for parent employers - Don’t take nanny employment issues lightly. The FLSA is a minefield when it comes to “domestic service” employees, most of whom are nonexempt and entitled to minimum wage and overtime (not to mention unemployment and workers’ compensation insurance). Just ask Darcy Snodgrass. Her nanny sued her and her husband for breach of contract and failure to pay overtime under state and federal law. Aside from alleging some very unflattering facts about Ms. Snodgrass (repeatedly harassed plaintiff to the point of vomiting), the Plaintiff maintained that the Snodgrass family could not challenge her overtime entitlement accounting because they failed to maintain time records of her employment. Never thought of that, huh? Yes, you might want to think about putting up a punch-card time clock in your living room.

What happens if you are a prevailing party entitled to attorneys’ fees under the FLSA, but the defendant company is hiding assets or otherwise avoiding a judgment? Fraudulent conveyances to avoid a judgment are not uncommon in FLSA cases. If a company is willing to violate the FLSA to lower the bottom line, they probably won’t have a problem hiding assets to avoid a subsequent judgment.

While most statutory fee shifting provisions are interpreted as compensating only services performed up to the time of judgment, a recent opinion from the District of Oregon interprets a similar provision in the FLSA to include post-judgment collection efforts. The Court noted that “without such an award, a judgment is a hollow victory for a plaintiff who was improperly paid.” Deadbeat companies, be warned. The defendant company in the aforementioned case was up to its eyeballs in debt – over $200,000. The Court had little sympathy and piled the fees on top of the outstanding debt.

If a company classifies an employee as salaried or managerial, the employee is not entitled to overtime, right? Wrong. Many companies exploit a common misunderstanding that salaried managers are exempt from overtime by fraudulently labelling employees as "managerial" when they perform mostly non-managerial tasks. In these instances, the company is liable for unpaid overtime wages and an equal amount in damages.

Often, companies leave evidence of their intent to violate the FLSA, in which case a larger class can be certified, and more penalities assessed. A recent lawsuit filed by misclassified AT & T managers sheds light on the tracks a company may leave after they violate the FLSA. According to the allegations in the complaint, Bell South originally paid so-called "First Level Managers" overtime before the AT & T takeover two years ago. The only changed circumstances was AT & T's desire to avoid paying overtime to administrators - they simply changed their titles and classified the newly minted managers as exempt.

Managerial employees should assess their duties and determine if they actually perform managerial tasks, such as hiring and firing employees, rather than clerical or administrative tasks. Do not rely on your employer's classification of your FLSA status, especially in those instances where the status changes suddenly without adequate explanation.

In March 2009, State Labor Commissioner M. Patricia Smith announced a record settlement with nine Asian restaurants in New York City which required owner Tsu Yue Wang to pay $2.3 million in minimum and overtime wage underpayments. In response to the allegations, Mr. Wang claimed that he was not the owner of the restaurants despite clear evidence that he maintained control.

According to a recently filed lawsuit, the hip and prestigious are not immune from the restaurant industry’s notorious defiance of wage and hour obligations. On December 21, 2009, Cipriani's event, catering and restaurant enterprise was sued for wage and hour violations. Specifically, the plaintiffs allege that Cipriani unlawfully retained service charges paid by customers to the waitstaff and shaved time from records in order to pay workers for fewer hours than they actually worked. Aside from failing to pay overtime, unlawful tip pooling and time shaving are two of the most common restaurant industry wage violations.

On October 26, 2006, the Department of Labor issued an opinion letter which had a massive impact on California’s IT community. Resolving a long standing dispute, DOL stated that employees who provide computer help desk support are not exempt from overtime under the “administrative” white collar or computer exemptions.

The industry has responded slowly to the DOL opinion, and many companies remain unaware of the implications of misclassifying tech workers as exempt. Jackson West with Valleywag notes that the practice of misclassifying nonexempt IT professionals as exempt is “endemic in California,” particularly at start-ups where long hours are common. One year ago, Kent Blake of Redmondmag.com, an online magazine which follows issues impacting the Microsoft IT community, characterized the scope of the problem as “the help desk overtime bomb.” Is the bomb ticking or has it exploded? Ask Apple and IBM. They have both been sued for misclassifying help desk employees and network engineers, with IBM settling their lawsuit in November 2008 for $65 million dollars.

If you are a computer professional in a tech position, your entitlement to overtime depends on whether your duties involve systems analysis and the application of programs, or implementing specifications developed by someone else for the purposes of troubleshooting customer or employee problems.

Paralegals are entitled to overtime pay (time and half for each hour over 40 per week).  But a NY paralegal was not paid overtime by her law firm and she sued them to recover her pay.  The law firm argued that the paralegal was not entitled to overtime because she fell into the “highly compensated employee” exception.  

The highly compensated employee exception provides that anyone who earns over $100,000 a year is not entitled to overtime.  (This is a broad summary – the rule is slightly more complex.)  she earned over $100,000 a year, but about a third of that came through a company she owned.  

She was only paid about $66,000 a year in salary by the law firm, but her company was paid another $50,000 a year by her law firm.   Her company performed filing services for her law firm and several other law firms.  

Her employer argued that they paid her over $100,000 a year and therefore she was not entitled to overtime as a highly compensated employee.   But the Court disagreed and held that the money paid to her company did not count because it was not compensation paid to her as an employee.  

Since she earned less than $100,000 a year as an employee, she was entitled to overtime and the law firm will be forced to pay her for the upaid wages plus possible penalties and related costs.

“What can brown do you you?”  A group of 660 big brown delivery drivers are ready to tell the  company what it can do for them – it can pay them 12.5M.  UPS just agreed to settle an overtime class action brought by delivery drivers who were misclassified as independent contracts.  

The drivers claim they were deprived of benefits that regular employees receive because they misclassified as independent contractors.

The settlement was reported by law.com last week.  According to the article, the parties settled after a multi day mediation with JAMS mediator Ronald Sabraw. 

Companies can save money by classifying workers as independent contractors because contractors typically do not get benefits such as health insurance.  Independent contractors are not entitled to overtime either. 

Certain strict requirements need to be satisfied in order for workers to be properly classified as independent contractors and companies often misclassify to reduce costs.   But the reality is that companies usually do not get caught misclassifying employees so it usually pays off, unless they get sued.  Here, UPS got caught.  

Have you ever noticed that people with lofty job titles are almost always paid on a salary basis?   There is a reason for that.   People who are “Professionals” are not entitled to overtime pay.   Companies often misclassify employees as professionals in order to avoid paying them overtime and a fancy title is good cover. 

For example, in Young v. Cooper Cameron, the company did not pay its “engineers” any overtime pay.   The “engineers” were all paid salaries and were not pay extra for overtime because the company classified the engineers as professionals.   This was a mistake.

The title of engineer was a little misleading.   None of the engineers had any college training.  They were all high school graduates.   Under the law, In order to be properly classified as a “professional” and exempt from overtime, you generally need a college degree or even an advanced degree. 

The workers in Young were misclassified as professionals and they should have been paid overtime.   No wonder, the title of engineer does sound professional, but a title alone is not enough.  Don’t be fooled by a title.  You might be entitled to overtime even if you have a title such as manager, engineer or the like.   For a more detailed discussion of the Young case, see our prior post below or the always insightful Waist a Second! blog.  

The California Workforce Resource Blog has a post lamenting the recent decision in Davis v. J.P. Morgan Chase & Co. In Davis, the court held that Chase erroneously classified its loan officers as exempt administrative employees. The court held that the loan officers were nothing more than financial production workers churning out the bank’s lending products and therefore were entitled to overtime. The bank had erroneously classified these workers as administrative employees who were salaried and exempt from overtime.

This decision means that thousands of wall street support personnel are likely being deprived of overtime.  Now, loan officers, brokers, analysts, account executives and many other positions are entitled to overtime. 

According to the Davis case, an employee qualifies for the administrative exemption under the Fair Labor Standards Act only if the employee’s primary purpose is devoted to the internal operations of the company such as human resources, accounting, or advertising.   These positions are considered administrative because they deal with the administration of the company itself and not with producing the goods or services of the company.  

In Davis, a group of loan underwriters were classified as administrative employees who were exempt from overtime.   The court held that this classification was wrong because the loan underwriters work was focused principally on producing the bank’s product, loans and not geared to the internal operation of the bank itself.   This ruling is likely to provoke a round of overtime lawsuits challenging wall street banks for misclassifying its employees. 

The Second Circuit decided Young v. Cooper Cameron on November 12, 2009. Andrew Young designed hydraulic power units for oil rigs. Young, like most of the other product designers at his company, never went to college. Instead, Young acquired expertise over his twenty year career in various engineering positions. His job required a fair amount of skill as he designed complicated pieces of equipment. Young’s employer, Cooper Cameron Corporation, categorized him as an exempt professional under the Fair Labor Standards Act and paid him a salary with no overtime.

Under the Fair Labor Standards Act, employees who are deemed “professional” are exempt from the overtime pay rules. Young challenged Cooper Cameron claiming that he was entitled to overtime pay because he was misclassified as a professional under the FSLA. The District Court agreed and found that Cameron Cooper misclassified Young and that Young was entitled to overtime pay. The Second Circuit agreed.

In order to qualify as an exempt professional under the FSLA, the position in question must customarily require an advanced academic degree. The regulations state that a professional is someone “[w]hose primary duty consists of the performance of [w]ork requiring knowledge of an advance type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study.” 29 C.F.R. § 541.3(a). Labels such as “engineer” and the like are not persuasive as the court noted that there are many engineers who do not hold advanced degrees.

In this case, none of the product design specialists employed by Cameron Cooper had advanced degrees. They were all high school graduates with no college training. Since the work of a product design specialist at Cooper Cameron did not customarily require a prolonged course of specialized intellectual study, the Court held that Young was misclassified as a professional and therefore entitled to overtime pay.

The Fair Labor Standards Act requires that employees be paid overtime (time and half) for all hours worked over 40 in a week. Seems like a simple concept, but it is not. Many employees are exempt from the overtime requirement and therefore are not entitled to overtime pay even if they work more than 40 hours per week. Employees who are considered “administrative” are exempt from the overtime requirement. The Second Circuit just issued a case, Whalen v. J.P. Morgan Chase & Co., which clarifies what it means for an employee to be deemed administrative under the FSLA.

The Whalen court focused on the difference between jobs that are” production” oriented as opposed to “administrative.” Employees who spend their time working on production activities are entitled to overtime pay, while those who work at administrative tasks are not entitled to overtime. The court never provides a solid reason as to why production employees are entitled to overtime pay and administrative workers are not. According to Whalen, a human resources associate is engaged in administrative work and not entitled to overtime pay, but a police detective is engaged in production work and therefore entitled to overtime. The court goes on for eighteen pages pointing out the differences between production and administrative jobs, but sadly a solid underlying reason for this distinction is not provided. Maybe that is because the rules that regulate the payment of overtime pay are not based on logic, but instead rooted in lobbying and politics. The next post will focus on the nuances that differentiate administrative and production employees under the FSLA.

The Iowa Employment Law Blog by Patrick Smith today reports on a potential new trend in employee overtime cases.
Many employees are required to have blackberries, iphones or other smart phones and find themselves tethered to work even at home or on vacation. For some, it feels like they are always at work. It turns out that employees might have the right to receive overtime pay for responding to the emails and other after work tasks required of them. See the Wall Street Journal Blog for more on these blackberry overtime cases.

If you are an employee who feels "shacked" to the office by a blackberry or other device, you might have the right to receive extra pay. The overtime laws can go back as far as six years in unpaid overtime, so some employees may be owed a lot of money. For people who are now out of work, the extra pay could not come at a better time.

According to an article posted on emediawire.com, an estimated 80% of employers are out of compliance with federal and state wage and hour laws. It is no wonder that my office receives so many calls from workers who are not receiving their fair wages.
According to the article mentioned above, between 2004 and 2006, the number of federal wage and hour cases increased by 86%, and the number of multi-plaintiff cases increased by 70%. The threat is so pervasive, many organizations are now including wage and hour violation fines as a fixed line item in their budgets.

With the increased exposure in recent years, it is my hope that employers begin to realize that these violations are very real and very actionable.