Later On

A blog written for those whose interests more or less match mine.

Can it be? Businesses robbing their employees?

leave a comment »

Can it really be that businesses deliberately fail to pay overtime to employees, in violation of the law? Apparently so. Very interesting article in Business Week on the practice—and how it leads to serious problems for the companies who broke the law. From the article:

No one tracks precise figures, but lawyers on both sides estimate that over the last few years companies have collectively paid out more than $1 billion annually to resolve these claims, which are usually brought on behalf of large groups of employees. What’s more, companies can get hit again and again with suits on behalf of different groups of workers or for alleged violations of different provisions of a complex tapestry of laws. Framed on the wall of Thierman’s office, for example, is a copy of a check from a case he settled for $18 million in 2003 on behalf of Starbucks (SBUX ) store managers in California. But the coffee chain is currently defending overtime lawsuits, filed by other attorneys, in Florida and Texas. Wal-Mart Stores (WMT )is swamped with about 80 wage and hour suits, and in the past two years has seen juries award $172 million to workers in California and $78.5 million in Pennsylvania.

“This is the biggest problem for companies out there in the employment area by far,” says J. Nelson Thomas, a Rochester (N.Y.) attorney, who, like Thierman, switched from defense to plaintiffs’ work. “I can hit a company with a hundred sexual harassment lawsuits, and it will not inflict anywhere near the damage that [a wage and hour suit] will.” Steven B. Hantler, an assistant general counsel at Chrysler, says plaintiffs’ lawyers are “trying to make all employees subject to overtime. It’s subverting the free enterprise system.”

In overtime cases, Depression-era laws aimed at factories and textile mills are being applied in a 21st century economy, raising fundamental questions about the rules of the modern workplace. As the country has shifted from manufacturing to services, for example, which employees deserve the protections these laws offer? Generally, workers with jobs that require independent judgment have not been entitled to overtime pay. But with businesses embracing efficiency and quality-control initiatives, more and more tasks, even in offices, are becoming standardized, tightly choreographed routines. That’s just one of several factors blurring the traditional blue-collar/white-collar divide. Then there’s technology: In an always-on, telecommuting world, when does the workday begin and end? The ambiguity now surrounding these questions is tripping up companies and enriching lawyers like Thierman.

About 115 million employees—86% of the workforce—are covered by federal overtime rules, according to the U.S. Labor Dept. The rules apply to salaried and hourly workers alike. Plenty of wage and hour lawsuits are filed on behalf of the traditional working class, be they truckers, construction laborers, poultry processors, or restaurant workers. But no one has been more successful than Thierman in collecting overtime for employees who are far from the factory floor or fast-food kitchen. His biggest settlements over the last two years have been on behalf of stockbrokers, many of whom earn well into the six figures. Thierman has teamed up with other lawyers to extract settlements totaling about a half-billion dollars from brokerage firms, including $98 million from Citigroup’s (C ) Smith Barney and $87 million from UBS Financial Services Inc. (UBS ) (As is typical in settlements, the companies do not admit liability.) With those cases drawing to a close, he and other attorneys already are pursuing new claims on behalf of computer workers, pharmaceutical sales reps, and accounting firm staff.

As Thierman sees it, these are the rank and file of a white-collar proletariat. “In the 1940s and 1950s,” he writes in an e-mail, “a large portion of American workers who were protected by overtime laws seem to have been forgotten as inflation drove up the absolute (not the relative) amount of compensation, and the bulk of workers began wearing sports coats and processing information instead of wearing coveralls and processing widgets.” In a subsequent interview he says: “I’m interested in the middle class—those are my folks.”

Read it all, along with the related items:

Graphic: No Industry Is Immune
Graphic: The Rules Reflect Old Assumptions…
Labor Law Time Warp

Written by Leisureguy

22 September 2007 at 11:30 am

Posted in Business, Daily life

Tagged with , , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: