Recently in Minimum wage and overtime lawsuits Category

Minor League Baseball Players Sue MLB for Wage Violations

April 3, 2014,

7632338498_d081455444_c.jpgWage, hour and overtime lawyers at Pintas & Mullins report on the recent lawsuit against Major League Baseball (MLB) over long-standing wage violations. The suit now includes former players from 17 different minor league teams, and specifically cites violations of the federal Fair Labor Standards Act.

The former players are claiming that they and their peers are powerless against the reign of the MLB organization, and that they are required to put in obscene hours of work for abysmal pay. The Fair Labor Standards Act (FLSA) was enacted in 1938, and states that employees may not be paid less than the minimum wage, which is currently $7.25 per hour.

Among its provisions, the FLSA also requires all employees to be paid overtime (time-and-a-half) for any work performed beyond 40 hours in a week. Legal and sports analysts confirm that baseball franchises are not exempt from the FLSA, so it is very unlikely that the MLB will be able to have the suit dismissed right away.

This case, Senne v. MLB, is interesting for many reasons: most relevantly because college football players at Northwestern University recently won the right to unionize. Athletes from different disciplines are starting to voice their grievances against the sports culture that is inextricable from American life. NFL players want recognition of and protection from repeated, dangerous head injuries; college players are fed up with a corrupt payment system; and baseball players wish to be paid for their immense labor.

The Northwestern case may not be the best parallel, but it is certainly interesting to consider. In that decision, a director of the National Labor Relations Board ruled that football players on scholarship were employees of the university, and should have the right to unionize to leverage for larger scholarships, better healthcare coverage, and other benefits. This was based on the stipulations of the National Labor Relations Act, and Northwestern plans to appeal the ruling.

The exploitation of athletes is nothing new - there are countless movies and stories about the hardships they endure for the love of the game. "It's supposed to be hard," Tom Hanks' character exclaims in A League of Their Own, "if it were easy, everyone would do it."

At present, the base salary for a minor league baseball player is $1,100 per month - less than a full-time fast food worker. There is no minor league union, like there is now for Northwester players, so negotiating a pay raise, one would imagine, is quite audacious. Minor leaguers throughout the country live in the smallest, most crowded apartments, must shop at Walmart, and eat pizza and ramen for fuel. They sleep on air mattresses and are expected to put in long days as professional athletes.

Long days often turn into long nights; for an evening game, players typically show up at noon to practice, the game starts at seven, and is finished around ten or eleven at night. The schedule is the same throughout the season, six days per week. They are not paid overtime, are able to take very few days off, and if they complain, are fired without severance. Only a few will ever make the majors.

In any other conventional industry, this would be illegal, which is exactly the point minor leaguers are trying to make now. They are undoubtedly spurred by the massive increase in major league baseball players' salaries: since 1976, big league salaries have risen by over 2,000%, while minor league salaries increased only 75%, failing even to keep up with inflation.

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New Year, New Laws

January 2, 2014,

gavel-6_l.jpgJanuary 1st ushers in a new set of rules for every type of person: a revised diet plan, changed relationship patterns, and, whether you realize it or not, many new and revised laws. Our team of injury attorneys would like to highlight a few of the most significant and far-reaching laws so residents may be better informed of their rights and regulations.

Collectively, the National Conference of State Legislatures estimates that the U.S. passed about 40,000 new laws throughout 2013. Let's begin in our home-state, Illinois, where several significant laws are now enacted. It is now legal to carry a concealed weapon in Illinois, provided carriers pass extensive background checks and receive 16 hours of training; it is also now legal for drivers to travel at 65 to 70 miles per hour on rural highways (which we wrote about here). Medical marijuana is legal as well, making Illinois the 20th state to at least partially regulate its consumption.

As far as illegalization, Illinois drivers will now face penalties if caught using cell phones while driving, though they may continue to use headsets or speakerphones. Affecting Chicagoans specifically, anyone caught participating in a violent flash mob will now face up to six years in prison. Additionally, pet owners who purchase an animal without being informed of serious ailments can now return the pet or be reimbursed for veterinary expenses, known as the "puppy lemon law." More Illinois law changes may be found here.

Next door in Missouri, three important laws were just enacted, the first raising the minimum wage to $7.50. A second law replenishes the state's Second Injury Fund, which is fed by workers' compensation insurance plans. The fund is for employees who suffer more than one injury on the job, and will provide compensation for the state's most vulnerable workers. The final Missouri law requires physicians to conduct congenital heart disease tests to all newborns.

Sweeping Changes in California

Californians are perhaps most affected by law changes this year, with amendments to the state's driving, immigration, familial, and employment standards. The state now has the highest minimum wage in the nation, at $9 an hour, which it plans to increase to $10 by 2016. At-home caregivers working over nine hours per day or 45 hours per week must now be paid time and a half, and outdoor workers are required to have breaks when temperatures reach certain highs.

In additional employment news, employers can no longer terminate workers for being victimized by stalkers, domestic violence, or sexual assaults. They also may not threaten illegal immigrants by suggesting to report their illegal status to the federal government.
In further efforts to aid immigrants, it is now illegal for county jails to turn over illegal immigrants to federal authorities. Those living in the state illegally may also now be admitted to practice law. Thumbing its nose at states like Texas and Utah, women in California have been granted additional abortion rights, as the state expands resident access to the procedure.

Drivers in California must now keep at least three of distance from cyclists on the road, and those driving low- or zero-emission vehicles may continue to use carpool lanes (even when solo) until at least 2019. As far as gun restrictions, the mentally ill who make violent threats may not own guns for at least five years, and kits converting standard magazines into high-capacity are now illegal. Those who want to purchase a rifle must now pass through a safety certification.

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Record-Breaking Settlement in Merrill Lynch Racial Bias Suit

December 9, 2013,

img_3800-merrill-lynch-smf_l.jpgGeorge McReynolds has been working at Merrill Lynch as a financial adviser for over three decades, though he often feels isolated and unfairly treated by management. Recently, he filed a racial discrimination lawsuit against the company, along with about 1,400 other African American brokers. The suit was tumultuous, lasting about eight years and ultimately concluding in a record-breaking $160 million settlement. Employment lawyers at Pintas & Mullins take a closer look into this historic case.

McReynolds joined Merrill Lynch in 1983, at their Nashville office, where few other black brokers were employed. He noticed an array of racial bias issues from the start, but enjoyed the work so kept his opinions at bay. In 2001, however, after a particularly transparent racially-motivated incident, he could no longer keep his mouth shut.

That year, he was assigned to team up with two other Caucasian brokers, where they were to pool all their accounts and equally divide profits. McReynolds noted a number of problematic issues within the team , including that the majority of accounts came from McReynolds, and constant disputes on how to handle them. By 2003, the team split up, with most accounts divided between the two white brokers, resulting in a $40 million loss in client assets for McReynolds. He was also annexed to a new office directly outside the women's restroom.

In 2004, a female Merrill employee successfully sued the company for gender discrimination and won about $2.2 million. This case was wrested from a slew of lawsuits filed in the 1990s, by women who claimed the financial industry systematically discriminated against female employees (the same is true of tech companies, an expose of which can be found here, via the New Yorker). At the time of the gender lawsuit, women made up about 33% of Merrill's managers and executives. For African Americans that number was a staggeringly dismal 4%. At present, fewer than 2% of Merrill's brokers are black.

McReynolds saw this injustice, lived with it for 30 years, and finally did something about it. His case, which he filed with the help of a Dallas-based Merrill employee, Maroc "Rocky" Howard, lingered in court for eight years and withstood numerous appeals. Ultimately, in the largest racial bias settlement ever in the U.S., McReynolds and 1,400 other similarly-situated brokers won $160 million.

In his complaint McReynolds affirmed that, though unintentional, there was a systemic racial bias in Merrill's practices. This is an exceptionally broad claim; most racial bias lawsuits allege very specific incidents against individual employees. Merrill claimed the fault rested in society - white brokers simply have more accessible connections and greater network of wealthy potential customers to invest. Plaintiffs did not contest this, instead noting that though this may be true, the societal problems were further exacerbated by Merrill's policies.

Specifically, plaintiffs cited the company's practices in assigning teams and distribution of accounts, asserting that black brokers were both less likely to be asked to join teams and less likely to have quality accounts transferred to them. In 2012, the Seventh Circuit Court of Appeals granted the brokers class-action status and affirmed that Merrill's policies did have the potential to be discriminatory. A trial was set for early 2014, however, both parties eventually agreed to the settlement.

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NY Starbucks Supervisors Permitted to Share Tips

November 25, 2013,

2945700150_e6d2bfa19f.jpgLabor law violation cases have proliferated in the United States in the past few years, much to the dismay of large corporations and the benefit of low-wage workers who are too often exploited. These cases are also extremely complex, which was evidenced in the most recent case against Starbucks, where New York baristas argued shift supervisors should not be allowed to share in tip pools. Wage, hour and overtime lawyers at Pintas & Mullins work extensively with these types of labor cases, and highlight this verdict to show the complexities of labor law violation standards.

After five years of litigation, the U.S. Court of Appeals ruled that shift supervisors have no meaningful authority over baristas and perform many of the same job functions, making it legal for them to share tips. The case, Barenboim v. Starbucks Corp., applies only to Starbucks employees in New York, though it could have implications throughout the country.

The state's highest court ruled, in a 5-2 decision, that limited supervisory duties did not prohibit the employees from partaking in pooled tips, citing Section 196-d of New York's Labor Laws. Specifically, the case hinged on the definition of "meaningful authority," and the exact nature of Starbucks shift supervisors' job function.

Who has Authority?

Section 196-d of the state's labor laws contend that no employer, its officer or agent can accept or demand, directly or indirectly, any part of gratuities received by an employee. In their original 2008 complaint, the baristas alleged that the shift supervisors were considered agents of Starbucks and therefore ineligible to receive tips.

The Appeals Court disagreed, noting that Starbucks shift supervisors were chiefly responsible for providing personal service to patrons (rather than overseeing and managing baristas) and thus had no meaningful authority that would exclude them from tips. The Court ruled that they would only be considered agents if they had broad managerial authority or similar power to control other Starbucks workers.

Ultimately, the Court made it clear that any employee whose principal or regular duty was to service patrons could participate in tip-sharing structures. Although their job functions also include assigning baristas to specific positions during shifts and providing performance feedback, the level of authority was not enough to exclude them.

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How the Employment Non-Discrimination Act will Impact the Workplace

November 5, 2013,

2843478060_5eb34cb6ff.jpgAs of November 5, 2013, the Employment Non-Discrimination Act (ENDA) was expected to pass through the Senate and make its way to the House. The bill would prohibit discrimination in the workplace based on gender identity and sexual orientation, just as discrimination is already forbidden on the basis of skin color, religion, nationality, age, sex, disability, race and nationality. Wage and hour attorneys at Pintas & Mullins are hopeful that the House of Representatives will see the merit of this bill, which is long overdue.

It may be surprising to know that it is currently legal in the majority of states (29) to terminate or refuse to hire someone based on their sexual orientation and gender identity. Some version of this bill has been introduced in nearly every Congress since 1994, though it has failed to pass every term. Only recently has the transgender provision been included.

What Rights will This Bill Award?

In its essence, ENDA will forbid employers from firing or refusing to hire employees based on being gay, lesbian, transgender or bisexual. It would simply expand the protections already in place regarding workplace discrimination so that they apply to all Americans, regardless of sexual preference of identity. If the law does not pass through the House (frankly it is not expected to, Speaker John Boehner stated the will oppose ENDA), the White House will consider issuing an executive order.

An executive order is issued by the president and has the full force of a law, not requiring the approval or input by the legislative (Congress) or judiciary (Supreme Court) branches. President Franklin Delano Roosevelt issued a similar executive order in 1941, Executive Order 8802, which banned discrimination by the federal government, unions and all companies engaged in war-related business. Namely, Order 8802 prohibited discrimination based on "race, creed, color, or national origin." It also created the Fair Employment Practices Committee to investigate discrimination claims.

It is now time for our government to take one more step forward. Although the executive branch would prefer to have ENDA pass through Congress, it has made clear that an executive order is not out of the question. The blog President Obama wrote for the Huffington Post on this issue may be found here.

National polling has shown that the large majority of Americans support ENDA and its message. According to a public opinion poll by the Center for American Progress, in 2012, 73% of voters supported protecting homosexual, bisexual and transgender people from workplace discrimination. Even among those voters who were generally unfavorable toward homosexual people and practices, 50% said they supported forbidding workplace discrimination for this demographic. That is a huge number and particularly telling of the wide gap between the American people and House conservatives.

ENDA Opponents Opine

Many Republicans in the House are staunchly opposed to ENDA, which they believe would create a "nightmare" of compliance and litigation costs and be an assault on religious freedom. One Congressman, Rob Portman (R-Ohio), told NPR that he wishes to expand ENDA to include provisions on religious liberties. Senator Jeff Merkley (D-Oregon), the lead sponsor of the bill, made a deal the Senate Republicans, promising support for a religious liberty amendment in exchange for their vote.

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Chicago Newsman Sued for Back Wages

October 15, 2013,

5636394630_dec7716f72.jpgWage, hour and overtime lawyers at Pintas & Mullins report that Bill Kurtis, Chicago veteran broadcaster and owner of Tallgrass Beef Company, was recently hit with a lawsuit by the former CEO of Tallgrass. The man sued both Kurtis and his beef company for alleged failure to pay back wages.

The plaintiff, James Whitney, was CEO and CFO of Tallgrass from December 2008 to 2011, when he was let go due to downsizing. Whitney claims he is owed a significant amount in back wages and reimbursable expenses for his time at the company.

A marketing firm, The Bloom Agency, is also named as a plaintiff in the lawsuit, though it does not name Kurtis specifically in its complaint. Bloom created and implemented a marketing plan for Tallgrass and designed its website, for which it was never paid. Together, Whitney and Bloom claim they are owed over $75,000 for their work.

A similar lawsuit was filed against Tallgrass in 2010, which ended in a fine of $403,000 for Tallgrass. According to that complaint, the company failed to make payments to dozens of its livestock suppliers, which sourced grass-fed, grass-finished beef to upscale restaurants in Chicago such as Frontera Grill and Harry Caray's. Kurtis ultimately reached an agreement with the suppliers and the USDA, resulting in the civil penalty.

The $400,000 penalty seemed to be unfair to many, especially once documents were released from the hearing. Official papers revealed that, as of 2009, Tallgrass actually owed $1.6 million to about four dozen livestock sellers. Ultimately, the company worked out a payment plan and agreed to be monitored by the Grain Inspection, Packers and Stockyards Administration (GIPSA), resulting in the significant penalty decrease.

This latest suit is a bit different in that it stems from violations of the Illinois Wage Payment and Collections Act (IWPCA), rather than GIPSA laws. Specifically, Whitney was not paid-in-full for his final compensation after being let go. Under the IWPCA, employees are legally entitled to the monetary equivalent of all earned vacation and holiday pay, wages, earned bonuses, and any other compensation owed after leaving a company.

Employees who are not timely paid their final compensation are able to, as Whitney did, recover monetary damages through civil action. Workers throughout the country are becoming more and more aware of this fact and consequently filing suit against their employers who withheld pay.

For example, California's Department of Industrial Relations recently announced that it was fining an Alameda restaurant nearly half a million dollars for wage theft violations. Employees of Toomie's Thai Cuisine notified the state department, reporting that they routinely worked at least ten-and-a-half hours every day, up to seven days a week. They claimed Toomie's did not pay them the required minimum wages for over time; instead, servers were paid $45 per day and kitchen staff between $75 and $120.

The citation includes nearly $375,000 in back wages to Toomie's employees and over $108,000 in civil penalties. Unfortunately, restaurant owners are some of the worst offenders of wage and hour law violations, particularly in California. The California Labor Commissioner stated that her department is not focusing on one particular industry, but is instead simply renewing its commitment to proactive, aggressive, and meaningful investigations to get workers' the wages they deserve.

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Best Buy Employees Receive $900,000 in Unpaid Wages Settlement

September 24, 2013,

5532842468_21bef14739.jpgWage, hour and overtime lawyers at Pintas & Mullins report that assistant managers at Best Buy recently settled with the company after being denied years of overtime pay. Under the terms of the settlement, plaintiffs will receive $902,000 collectively for their unpaid wages.

The Best Buy assistant managers were forced to clock out and wait for physical security to check them before they could leave work, which often took about 30 minutes. Managers were never compensated for this time, which added up significantly for many of the longer-term workers.

A similar failure-to-compensate case is currently pending against CVS, which also requires employees to wait for security checks after clocking out and before leaving for the day. Assistant manager plaintiffs in the CVS class-action also claimed that they were forced to work though meal and rest breaks without fair compensation in violation of both state and federal laws.

Meanwhile, a federal judge in California recently granted partial class-action status to a separate group of Best Buy employee plaintiffs, who are suing the company for failure to pay for overtime, travel, and meal periods. Plaintiffs are repair technicians - better known as the Geek Squad - and are alleging that they should have been paid for all hours worked beyond 40 in a week and for meal breaks in accordance with the Fair Labor Standards Act (FLSA). The judge affirmed that their claims were not suited to full class-wide treatment, but that their allegations concerning failure to pay for commuting and overtime presented common issues for all Best Buy techs.

In other overtime wage violation news, a management firm was recently ordered to pay nearly 65 Dunkin Donuts employees over $197,000 in back wages. The firm, QSR Management, owns and operates 55 Dunkin Donuts franchises throughout Staten Island, N.Y. and New Jersey. After complaints were reported from these QSR-owned franchises, officials from the U.S. Department of Labor's Wage and Hour division launched an investigation into the franchises.

The two-year investigation, headed by the division's Southern New Jersey unit, found that QSR fraudulently failed to pay its store managers overtime wages. Like Best Buy and CVS (also Apple and countless other companies throughout the nation), QSR falsely labeled all managers at the 55 franchises as exempt from overtime wages. As a result of the investigation, 56 Dunkin Donuts store managers will be paid a collective $197,550 in back wages.

At two of the locations federal investigators also found that Dunkin Donuts management was taking tips from customer services workers to make up for shortages in register counts. This is in direct violation of the FLSA, resulting in minimum wage citations and fines of $237 for eight management employees.

The Dunkin Donuts investigation was launched in April 2011 and concluded in March 2013. In a statement, Dunkin Donuts affirmed that each franchise owner is responsible for ensuring their own business practices are in compliance with federal, state and local laws. Decisions such as employee wages and benefits offered are up to each individual franchise owner.

Managers, assistant managers and other similar employees may only be considered exempt from overtime wages if they are paid on salary and/or if their job contains certain responsibilities, such as the ability to hire and fire. QSR claimed its managers were salaried though it actually paid them on an hourly basis, reducing pay if they ever worked less than 60 hours per week. Overtime exemption only applies if managers are guaranteed a weekly salary at least $455.

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Fast Food Strikes Across the Country Call for Higher Wages

August 30, 2013,

mcdonalds-115057-m.jpgWage, hour and overtime lawyers at Pintas & Mullins have written extensively about the recent strikes taking place throughout the country by fast food employees. Workers from restaurants like McDonald's, Wendy's, and Taco Bell are striking in efforts to obtain higher wages and union protection.

The fast food strikes began in the spring of 2013 in New York City, one of the most expensive cities in the world to live in, when fast food employees could not even afford meals at their own restaurants. Thousands of employees participated in the first walk-outs and strikes in the city, which quickly spread to Chicago, St. Louis, Detroit, Seattle, and other metropolitan areas.

The minimum wage in the United States is set at $7.25 - barely enough to pay the bills and put food on the table. It was last raised in 2009, and President Obama is pushing to boost it in the ensuing years to $9. Despite working full-time, many fast food employees have to stay in homeless shelters or apply for federal assistance. Workers are now asking for living wages - $15 dollars an hour - to be able to buy basic goods, such as furniture for their families.

The most recent strike in Chicago involved 60 retailers and 400 low-wage employees, from companies such as Potbelly, Forever 21, and even Nordstrom Rack. At least one McDonald's in the city amended its employment standards after the strike; now, workers at that location no longer have to pay for the food they mistakenly burn on the job.

One employee of Nordstrom Rack received a raise of $1.50 after striking, along with a promotion to coat specialist. Labor organizers at the Jason's Deli on Dearborn and Lake claim they also received raises in the wake of last month's strike. Another Forever 21 employee says she received an increase in hours. A Victoria's Secret employee enjoyed a $2.26 raise after the strikes, though now he is hoping the company will revise its on-call policy so he can have a steadier schedule.

Organizers say the 2013 strikes are the largest ever by fast-food workers. Several hundred workers recently gathered at the Fifth Avenue McDonald's in NYC, to voice their complaints about their wages and lack of union representation. One married employee is forced to share an apartment with her mother despite both her and her husband having full-time jobs.

On the other side of the picket line, executives from McDonald's state that increasing wages would have a potentially negative impact on employment as well as for customers. According to the Massachusetts Institute of Technology (MIT)'s living wage calculator, an unmarried adult would have to earn $10.48 and work full-time (40 hours a week) to constitute a living wage.

The average daily salary for a fast food CEO is about $25,000. The yearly salary of one of his workers (they are all male in the U.S.), is $11,000 - meaning that the CEO makes more than double the amount in one day than an employee makes in an entire year. Two thirds of fast food employees are adult women, trying to support a family, often alone.

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Dunkin Donuts Franchises Pay Employees for Back Wages

August 27, 2013,

Wage, hour and overtime lawyers at Pintas & Mullins report that 55 Dunkin Donuts franchises in New Jersey were recently ordered to pay nearly $200,000 in back wages to its managers and customer services workers.

2354047211_fa96dde78c.jpg The operator of the franchises, QSR Management LLC, also owns Dunkin Donuts locations in Staten Island, New York. The company was recently subject to investigations by the U.S. Department of Labor's Wage and Hour Division, which found multiple minimum wage and overtime violations. Specifically, investigators found that QSR was not paying its managers overtime wages by listing them as exempt, a clear violation of the Fair Labor Standards Act (FLSA).

All 55 managers will now be paid a collective $197,550 in back wages. Several customer service workers will also be paid a substantial sum because management at two New Jersey locations took tips from them to cover register shortages, resulting in minimum wage issues.

The director of the federal Wage and Hour South New Jersey Office stated that these 55 managers are all entitled to protection under the FLSA. They worked long hours for which they deserve to be compensated, and their employer's failure to pay for their overtime violated their rights. QSR was fraudulently labeling the managers as hourly workers and reduced their pay if they ever worked less than 60 hours per week.

Under the FLSA, managers can be exempt from overtime wages only if they perform certain job duties and receive a guaranteed weekly salary of at least $455. QSR never guaranteed these workers a weekly salary and most received under $455 per week, rendering the managers entitled to overtime wages when working over 40 hours in a week. QSR agreed to pay the back wages and changed its employee handbook to reflect its compliance with valid FLSA standards, including no longer allowing management to withhold tips from employees.

The Wage and Hour Division has significantly stepped-up its FLSA compliance investigations throughout the country in recent years, often targeting low-wage industries. Fast food restaurants like Dunkin Donuts often employ vulnerable workers, such as immigrants or the impoverished, so they can more easily get away with pay violations.

When the Department of Labor investigates a business or operations company, it examines and transcribes records from the last three years, looking for complete, accurate, and unambiguous information from each pay period. The Department also confidentially questions employees, and investigates the conditions and practices of the business to determine if it is in violation of any FLSA provision. Those found to be in violation may be fined, imprisoned, or both, depending on the seriousness and amount of violations.

In related news out of Arizona, a tactical-gear manufacturing company based in Peoria was recently ordered to pay about $124,000 in back wages after a federal investigation. Like the QSR Dunkin Donuts, Tyr Tactical was found to be in violation of the FLSA's overtime requirements. Investigators discovered that nearly 80 current and former Tyr employees were not properly compensated for the hours they worked beyond 40 in a week.

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Department of Labor Cracks Down on Shale Gas Industry

August 13, 2013,

7797110302_260d344a89.jpgWage, hour and overtime lawyers at Pintas & Mullins report that the federal Department of Labor has recently increased scrutiny on employment issues in the shale gas industry. The agency has conducted enforcement initiatives on wage and hour laws in the oil and gas fracking occupations.

Those in the industry affirm that the odds of being subject to a Department of Labor (DOL) audit are much higher now than in previous years, as the government adds more investigators and focuses more on enforcement. Specifically, the agency recently announced that it was increasing enforcement efforts in the Marcellus Shale regions of West Virginia, Pennsylvania, and the Southwest.

The Marcellus Shale is one of the largest shale regions in North America; it is rich in natural gas and runs through much of Pennsylvania, up through New York, Ohio, West Virginia and Maryland. The process of 'fracking' has stirred up much controversy in recent years, as the process requires extensive drilling with pressurized fluids to bring natural gas to the surface, often causing irreparable harm to the environment and animal habitats.

Two DOL investigators are currently looking into overtime payments and employee classifications as independent contractors. Workers classified as independent contractors are legally exempt from receiving overtime pay and benefits, which is why a large amount of companies abuse the classification. The DOL is investigating vendors who provide driller, tree clearing, paving, road construction, and water and stone hauling and masonry services, among others.

In December 2012, a company that collects groundwater samples, GES, agreed to pay nearly 70 employees more than $185,000 in back wages. The company illegally and improperly classified these workers as independent contractors, failing to pay them the overtime wages they deserved under federal law.

In July 2013, the DOL announced that Morco Geological Services, based in New Mexico, was to pay nearly $600,000 in back wages to over 120 current and former employees. The company was found to be in violation of several wage and hour laws, including those pertaining to record-keeping, overtime, and minimum wages. Again, Morco was cited additionally for misclassifying employees as contracted workers.

Both Morco and GES agreed to settle with the DOL outside of court. If a company does not comply with the requests for back wages from the agency, the government may, and often does, file a complaint in federal court regarding the issues. If the company is found guilty in court, it will be forced to pay not only the back wages to its mistreated employees but will have to pay damages as well, which are often equal to the back wages. If the company is a repeat offender, it would likely face an array of civil penalties as well.

Some employees know for certain that they are improperly classified, and instead of waiting for the DOL to investigate and propose a settlement, decide to file private, class-action lawsuits. Should the employees win in court, the company will be forced to pay not only their back wages and damages, but the plaintiff's attorney fees as well.

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Low-Wage Workers Routinely Cheated, Study Confirms

August 2, 2013,

Wage, hour and overtime lawyers at Pintas & Mullins highlight a recent report based on a survey of more than 4,000 low-wage workers, revealing that these employees are often denied overtime wages and paid less than the minimum wage, among other federal labor law violations.

cashier-at-her-register_l.jpg The study, titled Broken Laws, Unprotected Workers, a full copy of which can be found here, is the most comprehensive examination of low-wage workers in more than a decade. Of the 4,387 workers surveyed, an astounding 68% of them had experienced at least one pay-related violation in the past week alone. The workers were employed in a wide range of industries, from apparel and textile manufacturing to child care.

It was determined that the average worker was cheated out of about $51 every single week in wage violations, which translates to a 15% loss in pay. The researchers, led by study author Ruth Milkman, were most surprised by employers' ability to convince employees not to file complaints or request workers' compensation after being injured on the job. Less than 10% of those suffering serious on the job injuries were ever reported for compensation to pay for medical bills and missed days of work.

The study illuminates the far-reaching phenomenon in the low-wage labor market in the United States of underpaying, undervaluing and largely cheating employees out of their hard-earned paychecks. It is worth noting that nearly 40% of those interviewed were illegal immigrants, more than 30% were legal immigrants, and another 30% were American-born.

The survey was administered to workers in Chicago, New York City, and Los Angeles, and researchers used an innovative, rigorous methodology to reach vulnerable workers often missed in standard surveys (such as illegal immigrants and those paid in cash). Among the minimum wage violations found in the study, it was reported that 26% of workers were paid less than minimum wage in the past week, and that these violations were in no way trivial. In fact, about 60% of workers were underpaid by more than one dollar every hour.

Among the overtime violations, the study reported that over a quarter of low-wage workers surveyed were required to work more than 40 hours in the past week. Of those, more than three quarters were not paid the legally required overtime rate of time-and-a-half. Similarly to minimum wage violations, the average low-wage worker put in about 11 hours of overtime in a given week, and some were not paid for this time at all, even at their abysmal hourly-rates.

Examples of this type of violation include being made to come in early or stay late after/before their shifts. About 70% of workers were not paid at all for the early/late work outside of their regular shift. Additionally, a very large majority of those surveyed worked enough consecutive hours to be legally entitled to at least one meal break. Of these workers, about two-thirds did not receive any break at all, much less a full meal break, had their breaks shortened, were consistently interrupted by their employer, or worked throughout the break. All of these acts constitute a violation of federal and state labor laws.

The U.S. Labor Secretary, Hilda Solis, responded to the study, saying that there is no excuse for the disregard of labor standards, particularly those designed to protect the most vulnerable workers. The department recently hired about 250 additional wage-and-hour investigators to help the federal government bring these atrocious violators to justice.

The study revealed that women were much more likely to suffer minimum wage violations than men, with the highest rates among illegal immigrant women. Among workers who were full American citizens, African Americans had violation rates nearly three times that of Caucasians.

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Long Island Cleaning Service Charged with Violating Wage and Overtime Laws

July 11, 2013,

5126759352_1d5e5ed718.jpgWage, hour and overtime attorneys at Pintas & Mullins report that the owner of Long Island-based Royal Commercial Cleaning was recently arrested and arraigned for failing to pay proper wages to his workers.

Royal Commercial Cleaning, owned by Jose Hector Hernandez Gramajo, cleans at least 27 movie theaters in the New York metro area. He now faces up to seven years in prison for breaking federal and state law by habitually underpaying his employees.

Gramajo was previously investigated by the U.S. Department of Labor in 2011, when he owed nearly $87,000 to many of his 33 employees. He attempted to settle this by giving the workers checks for more than $3,000, telling them to cash the checks and give the cash back to him. To drive his point home he said if they did not return the money to him they would no longer have jobs.

For payroll, Gramajo paid his employees in flat rates, usually between $700 and $800, every month, refusing to pay any more in overtime if they worked over 40 hours a week. Overall, employees of Royal Commercial Cleaning worked seven days a week, eight hours a day; for their working hours, the flat rates they earned were much less than the minimum wage. The crew foreman was also paid a flat monthly rate and did not ever receive overtime pay, despite working over 56 hours every week.

In the court filing, Gramajo was charged with at least four felonies and three misdemeanors, including Violations of the Workers Compensation Law, Scheme to Defraud, Falsifying Business Records, Failure to Pay Wages in Accordance with the Labor Law, and Willful Failure to Pay Contributions.

Recently in Pennsylvania, several resorts were similarly charged for breaking wage and hour laws. Those hotels include Heritage Hills Golf Resort and Conference Center in York County, Avalon Hotel in Erie, and Nemacolin Woodlands Resort in the Laurel Highlands. Pennsyvania is actually fourth in the nation for number of hotels breaking labor laws, just behind Alabama, Florida and Texas.

York County, Erie and Pittsburgh had the highest number of violations, followed by Farmington, Lancaster and Harrisburg. Unfortunately, the men and women affected by this widespread fraudulent practice are low-wage, largely unskilled workers, who are often reluctant to report or even talk about their situations.

They are often subject to harsh retaliation by their employer if they speak up; some hotels even have non-disclosure agreements, which is a legal contract outlining certain information one party agrees not to disclose. Vulnerable workers, such as immigrants, unskilled laborers, or with restrictive financial situations, are too often subject to unfair treatment and disparate wages.

The Heritage Hills Golf Resort, in Springettsbury and York townships, is a repeat offender, despite its status of being a luxury hotel, spa and golf destination. It was previously charged in 2003, 2007, and now, 2013. Among its charges included violating child labor laws.

Heritage Hills' parent company agreed to pay more than $55,000, along with nearly $5,000 in penalties, in 2010 for back wages for more than 200 workers after a federal investigation. Since then, the company has cut back on employing anyone under 18 and stopped automatically deducting meal breaks from paychecks.

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AAI Corp Faces Mounting Lawsuit for Unpaid Overtime Wages

June 24, 2013,

Wage, hour and overtime lawyers at Pintas & Mullins report that AAI Corp, the aerospace and defence development and manufacturing firm, may be facing a class-action lawsuit for failing to pay overtime wages. Plaintiffs allege the company has a policy of not paying overtime wages to its pilots and field service engineers.

1409594_gavel_4.jpg The Baltimore Business Journal recently reported that two men from California are at the forefront of the suit against AAI, which is a subsidiary of Textron Systems. The two men filed the lawsuit in Baltimore, claiming AAI wrongly classified them as contractors, therefore disqualifying them from receiving overtime wages.

One man, John Keenon, is a former extended range multi-purpose program (ERMP) pilot, leaving AAI in 2012. The co-plaintiff, Eric Trembly, is still employed by AAI, also as an ERMP pilot. Last year, in 2012, AAI settled three separate similar wage and hour lawsuits in Baltimore, Washington State, and Alaska. These settlements totaled more than $1.6 million in compensation to those employees.

The Baltimore case stemmed from similar allegations of failing to pay overtime wages, this time to field service engineers who maintained and repaired AAI unmanned surveillance aircrafts (more commonly referred to as drones). AAI field service engineers repair surveillance aircrafts at military sites around the world, including in Afghanistan and Iraq.

The plaintiffs in this case allege AAI did not pay them the legally required "time and a half" for the time they worked beyond 40 hours in a week, which directly violates the federal Fair Labor Standards Act (FLSA). They claim their supervisors knew about the unpaid overtime, as well as the unpaid time for travel, work assignments, and for working more than 12 hours in one day.

The most recent case involves the pilots of these drones, who undertake the operation of ground control systems. These employees believe they were improperly classified as exempt to collecting overtime.

The plaintiffs are seeking class-action status for their lawsuit, which gives both current and former AAI employees the opportunity to sue if they also feel they have been unfairly classified. These employees may be able to share in any compensation.

Meanwhile in New Jersey, a group of police officers are also seeking to bring a class-action lawsuit against the city of East Orange. Like the AAI employees, the officers claim they are owed compensation for unpaid overtime, dating back to September 2009. So far 21 officers have joined the potential FSLA class-action.

Several officers from East Orange allege that the police department fails to keep accurate records of officers' working hours, which violates the FSLA's timekeeping requirements. Officers not only in New Jersey but throughout the country are often required to stay late to finish police reports and come in early to review and analyze crime data.

Requiring officers to begin work prior to the start of their shift and continue working after it ends, and not paying them for this time, is against the law. Some East Orange officers complained of the illegal practice to their supervisors, however, most simply tolerated it for fear of retaliation. Plaintiffs allege that they were indeed subject to discipline if they did not report to work at least ten minutes prior to the start of their shift.

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Labor Department Investigates Wage and Hour Violations Epidemic

June 13, 2013,

Wage, hour and overtime lawyers at Pintas & Mullins highlight a recent conference held by the U.S. Labor Department, during which the agency affirmed it was taking new approaches in investigating company wage and hour compliance after an epidemic of violations.

paycheck_l.jpg Despite the recent crackdown on illegal practices, workers throughout the country continue to be denied minimum wage and overtime. This problem is particularly persistent in low-wage workers and tipped employees. As the Labor Department's solicitor put it, the situation at present is nothing short of an epidemic.

This year marks the 75th anniversary of the Fair Labor Standards Act (FSLA); it was initially enacted in the Depression era, when jobs were scarce and exploitation was abundant. At a conference at New York University Law School celebrating this anniversary, speakers affirmed that the agency just recently began a new emphasis on investigations of potential systemic violations of the Act.

In previous years, the federal agency opened investigations based solely on workers' complaints. Since 2012, however, it has focused more on directed investigations, during which it examines entire industries or geographical areas. For the previous method, based on workers' complains, the agency found violations 79% of the time. Now, in directed investigations, it finds violations about 71% of the time.

These staggering statistics prove that FLSA violations are indeed an epidemic in the United States, where the average consumer is only just beginning to recover from the recession. For example, Cemex Inc, a Houston-based cement supplier, reached an agreement with the Labor Department in late 2010 after investigations revealed several FLSA violations. That one investigation, centering on just one Cemex facility, spread to other facilities throughout the country, ultimately reaching a $1.5 million settlement.

During the conference the Labor Department also highlighted systemic violations in a garment supply chain based in Southern California. The Department examined about 1,500 manufacturers and subcontractors for minimum wage and overtime violations, leading it to pursue a subpoena of Forever 21, the popular retailer, for information about its subcontractors.

In addition to wage, hour and overtime violations, the department is also working with individual states on issues related to worker misclassifications. In recent years more than 300 wage and hour investigators have been hired in state departments around the country. In 2011 alone, the agency recovered nearly $225 million in back wages for American workers.

New York State recently (2011) enacted a new Wage Theft Prevention Act. Even more recently, in January 2013, the New York State Assembly considered amending the Act to increase the amount of damages an employer must pay for failing to pay employee wages. In fact, it would double the amount. Currently the liquidated damages due in a wage theft dispute is set at 100%. If the failure to pay wages persisted for more than 30 days or involved ten or more employees, that number would shoot up to 200%, if the amendment is accepted.

For example, if it goes through, if an employee was owed $10,000 in back wages the employer would actually be liable for up to $30,000 in damages. Legislators believe this increase would send a clear message to employers who fail to pay or immediately resolve any issues of wage theft.

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Southwest Companies Pay Up for Overtime Back Wages

June 6, 2013,

924972_work_on_train.jpgWage, hour and overtime lawyers at Pintas & Mullins report on two of the most recent companies ordered to pay employees their overtime back wages. Colorado's Ludvik Electric Co. will pay more than $75,000 to nearly 140 electricians, and Houston, Texas's Honghua America will pay nearly $690,000 to over 130 crane operators and roughnecks.

The Texas company was ordered to pay more than half a million dollars after an investigation by the U.S. Department of Labor's Wage and Hour Division. The federal agency found several violations of the Fair Labor Standards Act (FLSA), particularly in the overtime provisions, at Honghua's equipment manufacturing facility, located in Houston.

Honghua America was reportedly illegally labeling its crane operators and manual laborers as independent contractors so it would not have to pay the standard "time and a half" for overtime work. Instead, the company paid its employees straight time for all hours worked, including anything over 40 hours in a week. Some employees logged as many as 80 hours per week at the Houston facility without any overtime compensation.

Unfortunately, the improper labeling of workers as independent contractors is a common practice, done in effort to avoid paying workers what they are entitled to under the FLSA. This undercuts not only the employees themselves, but other companies that fully comply with federal and state employment laws as well. Due to this fraudulent phenomenon, the government has put in exhaustive effort in the past few years cracking down on illegal misclassifications.

Employees classified as independent contractors receive 1099 forms instead of W-2s upon employment; simply receiving this document, however, does not legitimatize the classification. Rather, the actual classification can only be determined by the relationship between the company and the worker. By misclassifying employees and independent contractors, companies can skip out on paying minimum wage, overtime, unemployment insurance, and workers' compensation benefits (among others).

In another recent investigation by the Wage and Hour Division, Ludvik Electric Co. was ordered to pay a little more than $75,000 in overtime back wages. Nearly 140 current and former Ludvik electricians will be enjoying this reimbursement for time they spent in training and required meetings but were never compensated for.

Failing to pay workers for trainings and required meetings is illegal, as is not paying time and a half for all time worked more than 40 hours in a week. Ludvik Electric is a large electrical contractor based in Lakewood, Colorado, also operating in Arizona.

If you know you have not been paid in full for all time worked, you do not have to wait for the federal government to conduct an investigation to be fairly compensated. One man, a former quick lube technician, recently filed a lawsuit against his employer for unpaid overtime wages.

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