Overtime

Overtime Exemptions Only Apply to Salaried Employees

March 1, 2023 | by Jonathan I. Nirenberg

Last week, the United States Supreme Court ruled that, no matter how much an employee earns per year, the primary exemptions to federal overtime pay requirement do not apply unless the employee is guaranteed to receive at least $455 per week for any week in which he or she performed any work for the employer.

Michael Hewitt worked for Helix Energy Solutions Group as a “toolpusher” on an offshore rig. Helix paid him a flat fee for each day he worked. Mr. Hewitt worked for Helix for four consecutive weeks, typically 12 hours per day for seven days per week, followed by four weeks off. Although Helix did not pay him for the four week periods when he was not working, Mr. Hewitt earned over $200,000 per year. Even though Mr. Hewitt regularly worked more than 40 hours per week, Helix never paid him an overtime premium.

Mr. Hewitt sued Helix under the Fair Labor Standards Act of 1938 (“FLSA”), a federal law that requires employers to pay covered employees receive overtime pay if they work more than 40 hours per week.

Is it a Bonus or is it a Tip: When Must Payments from Third Parties be Counted When Calculating Overtime Pay?

September 10, 2019 | by Jonathan I. Nirenberg

The Third Circuit recently addressed when a bonus an employee receives from someone other than his or her employer counts toward the employee’s “regular hourly rate” of pay under the Fair Labor Standards Act (“FLSA”).

The FLSA is a federal law that, among other things, requires employers to pay most non-exempt employees time-and-a-half when they work more than 40 hours in a workweek. As a result, the higher the employee’s regular hourly rate, the higher the overtime pay premium the employee is entitled to receive.

The case involves employees of Bristol Excavating Inc., an excavation contractor, who work at sites owned by another company, Talisman Energy Inc. Since the employees work 12 ½ hour shifts every day for two straight weeks, followed by a week off, they routinely work substantial overtime hours.

Employer Cannot Offset Unpaid Work with Voluntary Pay During Meals

October 31, 2016 | by Jonathan I. Nirenberg

A recent ruling from the United Stated Third Circuit Court of Appeals in a wage and hour lawsuit holds that an employer cannot use the fact that it voluntarily paid its employees during their lunch to offset periods when employees worked but were not paid. The Third Circuit is the federal appellate court that handles cases from several districts, including the District of New Jersey.

The case was brought by Bobbi-Jo Smiley, Amber Blow, and Kelsey Turner, three former employees of E.I. Dupont De Nemours & Co. and Adecco USA, Inc. (collectively, “DuPont”), as a potential class and collective action. They claimed DuPont failed to pay them overtime for a total of approximately 30 to 60 minutes per day for time they spent (1) “donning and doffing,” meaning putting on and taking off their uniforms and protective gear, and (2) “shift relief,” meaning updating the employees who would be relieving them on the next shift. Since the employees routinely worked more than 40 hours per week, they claimed they were entitled to time-and-a-half for these additional pre-shift and post-shift overtime hours.

The workers sued under the Fair Labor Standards Act (“FLSA”) and a similar state wage and hour law. After 160 workers joined the lawsuit, DuPont filed a motion for summary judgment seeking to have the case dismissed. The company argued that because it had voluntarily paid the workers during their lunch and other meal breaks – something it was not legally required – those payments should offset any additional overtime pay which the employees might be entitled to receive. The trial court agreed and dismissed the case since the paid meal breaks were longer than the unpaid donning and doffing and shift relief time. The employees appealed.

Court Approval Needed to Dismiss Overtime Lawsuit

August 24, 2015 | by Jonathan I. Nirenberg

The Second Circuit Court of Appeals recently ruled that the parties to a lawsuit cannot agree to dismiss a case under the Fair Labor Standards Act (“FLSA”) as part of a settlement unless they have the approval of a Judge or the United States Department of Labor (“DOL”). The FLSA is a federal wage and hour law which establishes minimum wage and overtime requires.

Dorian Cheeks worked as a server for Freeport Pancake House, Inc. and W.P.S. Industries, Inc. He filed a lawsuit in the Eastern District of New York against both companies in which he asserted claims under the FLSA and New York Labor Law. He is seeking unpaid overtime pay and liquidated (double) damages, as well as attorneys’ fees. He also alleges that the Pancake House demoted him and eventually fired him because he objected about the company’s failure to properly pay overtime to him and its other employees, and is seeking damages for his past and future lost wages.

Mr. Cheeks and the Pancake House eventually agreed to settle the case. Accordingly, they filed a stipulation with the court seeking to have the case dismissed with prejudice. However, the court refused to dismiss the case. Instead, it directed the parties to file a copy of their settlement agreement as part of the public record, and to explain why they believe the settlement is “fair and reasonable.” The Court did so because the FLSA prohibits employees from waiving their rights under it unless their settlement agreement either was supervised by the DOL or approved by a court.

Third Circuit Finds Individual Owners and Successor Company Can Be Liable for Overtime Violations

April 16, 2014 | by Jonathan I. Nirenberg

The Third Circuit Court of Appeals recently reinstated an employee’s class action overtime pay lawsuit under Fair Labor Standards Act (FLSA) and the New Jersey Wage and Hour Law (NJWHL). In doing so it recognized successor companies can be liable for their predecessors’ overtime violations, and individual owners and supervisors can be held personally liable under both of those laws.

Patricia Thompson was hired by Security Atlantic Mortgage Company as a mortgage underwriter in June 2009. Security Atlantic quickly assigned her to provide training at a related company, Real Estate Mortgage Network (REMN). In February 2010, Security Atlantic stopped doing business and Ms. Thompson began working directly for REMN. Otherwise, her job and the business remained essentially the same.

Ms. Thompson claims Security Atlantic and REMN both failed to pay her and other mortgage underwriters time-and-a-half when they worked more than 40 hours per week, in violation of both the FLSA and the NJWHL. Specifically, she alleges mortgage underwriters worked through lunch and at home to complete their assignments on time, but were not paid overtime because the companies misclassified them as exempt employees.

When is an Individual Personally Liable for a Company’s Overtime Violations?

November 13, 2013 | by Jonathan I. Nirenberg

Earlier this year, the Second Circuit Court of Appeals ruled that a company’s Chief Executive Officer can be held personally liable for a company’s overtime violations even if he had no personal involvement in violating the law.

In Irizarry v. Catsimatidis, a group of employees filed a class action overtime claim against Gristede’s Foods, Inc. They brought federal claims under the Fair Labor Standards Act (FLSA) as well as claims under the New York Labor Law. They also named the company’s Chief Executive Officer, its District Manager, and its Vice President as individual defendants in the lawsuit.

Eventually, the court ruled in favor of the employees, finding Gristede’s failed to pay them time-and-a-half for their overtime hours, in violation of the FLSA and New York State law. At the time the court did not decide whether any of the individual defendants were personally liable.

Supreme Court Rules Offer of Judgment Renders Overtime Collective Action Moot. Or Does it?

May 1, 2013 | by Jonathan I. Nirenberg

Last month, the United States Supreme Court dismissed an overtime case filed by an employee, Laura Symczyk, against her former employer, Genesis Healthcare Corporation. Ms. Symczyk filed the case as a collective action on behalf of herself and other similarly situated employees who were not paid for all of the hours they worked. Specifically, she claims Genesis deducted 30 minutes of pay per day for a meal break, even when they worked during their break. She asserted the company’s policy violates the Fair Labor Standards Act of 1938 (“FLSA”). The FLSA is a federal law that set the federal minimum wage and guarantees overtime pay to non-exempt employees. The FLSA permits employees to sue on behalf of similarly situated employees in what is called a “collective action.”

When Ms. Symczyk filed her lawsuit, Genesis made her a formal settlement offer, called an offer of judgment, in the amount of $7,500 plus all of her attorneys’ fees and costs. Ms. Symczyk admits the $7,500 would have full compensated her for all of her own damages. However, she did not respond to the offer because she wanted to continue with her case on behalf of her coworkers, and as a result never received the $7,500. But since the offer would have paid Ms. Symczyk everything she was seeking for herself in the lawsuit, and none of her coworkers had joined the case, the trial court no longer considered her to have a personal stake in the outcome of the case. In other words, it deemed her case to be moot.

On that basis, Genesis sought to have the case dismissed. In response, Ms. Symczyk argued the company was improperly trying to end the case before the collective-action portion of the case even could begin.

The District Court dismissed the case. It ruled the $7,500 offer of judgment fully satisfied Ms. Symczyk’s claim, and a collective action cannot proceed unless there is at least one person who has joined the case whose claim against the company is not moot. The Third Circuit Court of Appeals reversed, finding that even though Ms. Symczyk’s claim was moot, it was improper for the company to try to “pick off” the named plaintiff to defeat the collective action. Genesis appealed the ruling to the United States Supreme Court. However, Ms. Symczyk did not cross-appeal the Third Circuit’s finding that her personal claim was moot.

In its opinion in Genesis Healthcare Corp. v. Symczyk, the Supreme Court ruled that since Ms. Symczyk did not cross-appeal the finding that her case was moot, it was bound by that conclusion whether or not it is correct. It then ruled that since her case is moot, she cannot proceed with the collective action on behalf of her coworkers. However, since the Court did not indicate whether Ms. Symczyk’s case really was moot, and merely assumed it because she did not cross-appeal that ruling, it did not indicate whether the same tactic of offering full damages to each named plaintiff would work in future cases. As a result, it remains unclear whether employees who bring collective actions and are offered settlements that would satisfy their own claims have the right to reject the offer and continue to proceed with the collective action.

Reducing Employee Hours in Response to Overtime Lawsuit Can Be Retaliatory

November 21, 2012 | by Jonathan I. Nirenberg

New Jersey’s Appellate Division recently recognized it can be unlawful for a company to reduce employees’ overtime hours in response to an overtime lawsuit. Specifically, the case finds that such a policy could violate New Jersey’s whistleblower law, the Conscientious Employee Protection Act (CEPA).

Howard Flecker III worked as a Deckhand for Statue Cruises, a company which provides ferry service from New York and New Jersey to Liberty Island and Ellis Island.Under the company’s Collective Bargaining Agreement (CBA), employees were entitled to be paid time-and-a-half only after they worked more than 48 hours per week. The FLSA is a federal law which requires companies to pay “non-exempt” employees overtime pay at the rate of time-and-a-half when they work more than 40 hours per week
In 2009, Mr. Flecker filed a class action lawsuit claiming the CBA violates the Fair Labor Standards Act (FLSA). In direct response to Mr. Flecker’s lawsuit, the company issued a memorandum indicating that none of its employees would work 40 hours per week. For example, the company reduced Mr. Flecker from 50 to 40 hours per week.

As a result, Mr. Flecker’s coworkers lost 8 or more hours of pay per week. Many of his coworkers confronted him about this on a daily basis, and pressured him to withdraw his lawsuit. Mr. Flecker’s lawyer told the company that its policy was a form of unlawful retaliation in violation of CEPA. The company responded that it was attempting to minimize the potential damages in Mr. Flecker’s overtime lawsuit. Eventually, due to the stress caused by his co-workers’ constant pressure to withdraw his lawsuit, he resigned. He also added a retaliation claim to his lawsuit under CEPA.

The trial court dismissed Mr. Flecker’s CEPA claim, finding he had not alleged any retaliatory action. However, in Flecker v. Statue Cruises, LLC , the Appellate Division disagreed, and found two potential retaliatory actions. First, it ruled a jury could conclude the company’s actions were intended to turn Mr. Flecker’s co-workers on him, which in turn forced him to resign. In other words, a jury could conclude the company constructively discharged him. Second, it found reducing Mr. Flecker’s hours because he filed an overtime lawsuit could violate CEPA if the company’s motive was to retaliate against him for filing his lawsuit. The court explained this theory was supported by the fact that, although the company claimed it was going to reduce the hours of all of its employees, it did not reduce the hours of at least two of the employees who had been harassing Mr. Flecker.

The Third Circuit Holds Parent Company Not Responsible For Wholly-Owned Subsidiary’s Overtime Violations

August 1, 2012 | by Jonathan I. Nirenberg

The Court of Appeals for the Third Circuit was recently asked if a parent company is responsible for overtime violations committed by its subsidiary. The lawsuit, In re Enterprise Rent-A-Car Wage & Hour Employment Practices Litigation, was brought by a group of assistant branch managers who worked for various locations of Enterprise-Rent-a-Car, which are wholly owned subsidiaries of Enterprise Holdings. The employees claimed Enterprise Holdings was liable for their overtime pay under the Fair Labor Standards Act (FLSA) as a “joint employer.” The FLSA is a federal law that requires companies to pay time-and-a-half overtime pay to most “non-exempt” employees.

Joint employment is when two or more employers share control of an employee. Although joint employment is a well-recognized concept, the Third Circuit was addressing this issue for the first time in the context of an FLSA claim. The court created a new four-part test for “joint employment,” which it named the Enterprise test.

Under the Enterprise test, in deciding if a party is a “joint employer,” courts must consider whether the company has:

(1) Authority to hire and fire employees;
(2) Authority to issue work rules and job assignments, and set conditions of employment like compensation, benefits, and hours;
(3) Authority to supervise and discipline employees on a day-to-day basis; and
(4) Control of employee records such as payroll, insurance, and tax records.

When the court applied this test, it determined Enterprise Holdings was not a joint employer even though there are many indications of joint management. For example, Enterprise Holdings is very involved in running its subsidiaries. It also provides them with administrative services and Human Resources support, including employee compensation guides indicating which employees should be paid salaries, and which employees should be paid by the hour. In addition, both companies are managed by the same Board of Directors. But the Court found that was not enough to make them joint employers.

The court reached this decision because it found Enterprise Holdings did not directly control assistant branch managers working for its subsidiaries, and the guidelines it provided to its subsidiaries were recommendations rather than requirements. Although the court suggested that other factors can also be taken into consideration, in Enterprise it gave those factors very little weight.

Supreme Court Rules Pharmaceutical Sales Representatives Not Entitled to Overtime Pay

July 1, 2012 | by Jonathan I. Nirenberg

Last month, the United States Supreme Court ruled that sales representatives working for pharmaceutical companies are not entitled to receive overtime pay under the Fair Labor Standards Act (FLSA). The FLSA is a federal law that requires companies to pay employees most of their employees overtime at the rate of one-and-a-half times their normal hourly rate in each week in which they work more than 40 hours.
Pharmaceutical sales representatives do not directly sell products. Rather, they attempt to convince doctors to prescribe their company’s products to their patients when appropriate. This process is called “detailing.”

At GlaxoSmithKline, sales representatives are paid a base salary plus a commission. Their commissions are based on the total sales of the drugs assigned to them, or the market share in their sales territories. Glaxo does not pay time-and-a-half to its sales representatives when they work overtime. As a result, several salespeople filed a lawsuit claiming they were denied overtime pay in violation of the FLSA.

The issue in the case was whether pharmaceutical sales representatives fall within an exception to FLSA’s overtime requirement under which employers do not have to pay overtime to their outside salespeople. In Christopher v. Beecham Corporation DBA GlaxoSmithKline, the Supreme Court ruled that pharmaceutical sales representatives fall within that exception for a variety of reasons. For example, it recognized that the FLSA uses a very broad definition of the term “sales,” which includes “any sale, exchange, contract to sell, consignment for sale, shipment for sale, or other disposition.” It also concluded that since pharmaceutical sales representatives are not allowed to make direct sales to patients, detailing is the equivalent of sales. Accordingly, it ruled that pharmaceutical sales representatives are not entitled to overtime pay under the FLSA.