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Unpaid Overtime Lawsuits Often Big Winners for American Workers

Sep 25, 2007 | Parker Waichman LLP As the American workday becomes increasingly longer, many employers look for ways to avoid paying workers the overtime pay that they deserve.   But lately, some of those employees have been taking their bosses to court to recoup unpaid overtime – and many of them are winning.

According to an article in BusinessWeek magazine, some of the nation’s biggest employers, including Wal-Mart, Starbucks, IBM and Merrill Lynch, have all been sued – repeatedly- by employees forced to work well beyond 40-hours-per-week without appropriate compensation.   What’s more, many of those suing are not “Blue Collar” workers who have been traditionally covered by overtime laws.  Instead, stockbrokers, pharmaceutical sales representatives, IT workers and others long considered “White Collar” workers have been awarded back pay and damages by courts in unpaid overtime lawsuits.

The Depression Era overtime laws now on the books were created at a time when most American’s worked Blue Collar jobs, and what White Collar workers there were kept “banker’s hours”.   The laws were created to insure that people got paid for the work they performed.   But also, the laws were intended to make overtime more expensive, thus encouraging employers to hire more full-time workers to avoid higher overtime wages.

But as the US has moved into a service economy, the line between Blue Collar and White Collar has become blurred, and banker’s hours are a remnant of the past.  Furthermore, with healthcare and other benefit costs rising, some employers are finding that demanding more hours from employees is more cost -effective than making new hires.   And in a quest to control costs further, some companies are trying to avoid paying overtime as well.

Unscrupulous employers usually avoid paying overtime in one of two ways.  Federal law requires that employees be paid time-and-a –half for each hour they work overtime.  But the law contains exemptions for certain professionals and executives.   To cheat workers out of overtime, some employers reclassify them as “management.”  But when these employees go to court, judges and juries are seeing right through that ruse.   In 2003, Starbucks settled just such a lawsuit after it tried calling some of its workers “managers” even though their main duties still consisted of pouring coffee. Computer programmers, help desk employees and other IT workers have also successfully sued their employers over such reclassification schemes.

The second way companies get off paying overtime is to fail to record all of their employees' hours.   According to BusinessWeek, a group of workers at Hollywood Video stores is suing that company because they were required to boot up the stores’ computers before they could clock in. And at closing time, they had to punch out before they totaled the store registers. Workers in Philadelphia were recently awarded a $72 million judgment against Wal-Mart after they sued, claiming that they were not allowed to log overtime.  A California jury also just awarded other Wal-Mart workers $172 million over the same practices.

But for every successful unpaid overtime lawsuit, many more workers are denied their rightful overtime pay.   Many mistakenly assume that because they are salaried or work in an office rather than a factory, they are not eligible for overtime.   But as more employees are successful in bringing unpaid overtime lawsuits against companies like Wal-Mart and Starbucks, other workers might just start standing up for their rights.

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