9th Circuit Upholds Decertification of Class in Overtime Case
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- Published on Friday, 29 April 2011 18:23
Michael Marlo and United Parcel Service, Inc. (UPS) both appealed a jury verdict awarding Marlo unpaid overtime, meal, and rest-period wages. UPS had classified Marlo as an executive and administrative employee under California's Industrial Welfare Commission (IWC) Wage Order No. 9. Therefore, UPS did not pay Marlo overtime or provide meal and rest periods. Marlo worked for UPS as a "hub supervisor." His job duties included supervising and training hourly employees, and part-time supervisors engaged in unloading, sorting, and loading packages. He also assigned employees tasks, provided training to ensure safety and efficiency, monitored the performance of employees and coordinated delivery times and volume. Marlo filed a class action, asserting that UPS had misclassified 1200 supervisors as exempt. The district court initially certified a class comprised of full-time supervisors employed by UPS from 2000 to 2004, who also allegedly were misclassified, and appointed Marlo as class representative. In 2008, however, the court decertified the class on the ground that Marlo failed to prove that common issues of law or fact predominated over individual ones. Specifically, the court held that Marlo failed to prove that the class members were engaged in nonexempt work, and that misclassification was the "rule rather than the exception." On appeal from that decision, the court held that the district court did not abuse its discretions in decertifying the class. In particular, the court held that the district court did not err in requiring a "week by week showing of work the [supervisors] actually performed," to determine whether any of the supervisors spent more than 51% of their time on managerial tasks....
Employers Continue to Face Difficult and Costly Litigation
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- Published on Wednesday, 20 April 2011 18:28
Recent cases, involving both jury trials and settlements, demonstrate that employers continue to face difficult and costly litigation in employment law disputes. Fortunately, in two of the cases described below, the employers obtained a defense verdict, although most likely still incurred significant defense costs. The defense costs of a single plaintiff case, taken through trial, are estimated by some to be in the $300,000 range, for reputable defense firms. Moreover, the significant amount of actual defense costs does not begin to address the immense time commitment these cases require from an employer in preparing a defense. For example, the typical production of documents in a wage and hour case often involves compiling volumes of payroll records that cover significant periods of time. In addition, the depositions of supervisors, managers, human resources personnel, co-workers and many others may be required as part of the lawsuit. Thus, because of the substantial amount of time and expenses associated with employment law litigation, and because of the continuing barrage of these types of case, employers must understand and follow the law, properly train their staff, and document as needed, particularly in regards to personnel matters. Employers should also consider "Employers Practices Liability Coverage" (EPLI). This is a type of insurance which provides coverage for most employment related matters. Some policies even cover wage and hour disputes, which many employers unfortunately must contend with, particularly in regards to misclassification of employees and overtime compensation claims. The following cases, which involve age discrimination, harassment, sexual orientation discrimination, exempt/overtime claims and failure to accommodate disputes are only a small sampling of the employment law cases that continue to plague employers....
Class Certification Denied in Wage and Hour Case
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- Published on Wednesday, 20 April 2011 05:59
A group of employees who worked as store managers for Big Lots Stores, Inc., and its affiliate, PNS Stores, Inc. (collectively Big Lots) filed a lawsuit on behalf of themselves and others similarly situated alleging that Big Lots failed to pay overtime compensation and various other wage-and-hour, meal and rest-time claims, as well as a claim for unfair business practices. Big Lots operates 178 closeout retail stores in California. The employees asserted that Big Lots uniformly misclassified its store managers as exempt employees based on their job description alone rather than on consideration of actual work performed, which allegedly involved a significant amount of time on nonexempt tasks. The store managers asserted that Big Lots classified store managers as exempt based on their job description and not on the actual work they performed in the stores. Further, the store managers alleged that they spent a significant amount of their time performing non-managerial tasks such as stocking shelves, unloading delivery trucks, packing boxes, assembling merchandise and displaying merchandise. One store manager alleged that he spent approximately "75%" of his time performing such non-managerial tasks, and that when doing so he was not directing the work of others, as required by the exemption criteria. The trial court denied their motion to certify a class of present and former Big Lots store managers holding that the company does not operate its stores in a standardized manner and has no systematic practice of misclassification of managers. On appeal, the court affirmed emphasizing that "there was insufficient evidence of a uniform corporate policy requiring store managers to engage primarily in non-managerial duties."...
9th Circuit Holds Employer Properly Classified Employees as Exempt Under Outside Sales Exemption
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- Published on Monday, 14 February 2011 22:18
Two employees of GlaxoSmithKline (Glaxo), filed a lawsuit seeking back pay, claiming they were improperly classified as exempt from overtime, pursuant to the "outside salesman" exemption, and thus denied overtime pay that they should have received pursuant to the Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. 201 et seq. The employees worked as Pharmaceutical Sales Representatives (PSRs) for Glaxo and were classified as "outside salesmen"a legal designation that exempts an employee from the FLSA's overtime-pay requirement. The district court found for Glaxo and the employees appealed. An "outside salesman" refers to an employee whose primary duty is sales, and who is primarily and regularly engaged away from the employer's place of business in performing those duties. An employee's "primary duty" refers to the principal, main, major, or most important duty that the employee performs. The employer has the burden of proof to establish that the employee meets the exemption, and exemptions are "narrowly construed" against the employer. In this case, although the employees argued that they did not actually "sell" to physicians, on appeal to the 9th Circuit, the court held that the employee's job duties fit squarely within the parameters of this exemption, noting that they earned a salary of up to $100,000 per year, well above minimum wage, and they received bonuses as an incentive to increase sales. In addition, the court observed that "under Plaintiff's view, PSRs are not salespeople, despite the fact that more than 90,000 pharmaceutical representatives make daily calls on physicians for the purpose of driving greater sales."...
Court Holds WC Claims Adjusters Are Exempt Employees
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- Published on Wednesday, 09 February 2011 16:00
A recently released but (as of yet) unpublished California Appellate decision upheld a trial court finding that workers' compensation claims adjusters are exempt employees, and therefore not entitled to overtime. In Hodge v. Aon Insurance Services (Second Appellate District, 2/2/11), the appellate court differentiated the jobs performed by adjusters working for Cambridge Integrated Services Group from those performed by Farmers Insurance. In doing so, the court determined that the job duties of the Cambridge adjusters meet the requirements for the administrative exception as detailed in Wage Order 4. The upshot for employers is that the job title alone is insufficient to determine whether someone qualifies as an administrative employee. Instead, the court took a close look at the adjusters actual job duties and how they related to the general business operations of both Cambridge and Cambridge's clients in making their determination that the Cambridge adjusters were found to be exempt from the various overtime laws. There are several requirements that must be met in order to properly classify an employee as exempt under the administrative exemption. The requirement at issue in Hodge was whether the duties involved the "performance of office or non-manual work directly related to management policies or general business operations of his/her employer or his/her employers customers." There are several ways to evaluate this. The plaintiff argued for application of the "administrative/production worker dichotomy" as espoused in Bell v. Farmers Ins. Exhchange (2001 87 Cal.App.4th 805 (Bell II). Bell II was a class-action suit brought by the claims representatives for Farmers Insurance. In analyzing the job duties, the court in Bell II determined that the claim representatives" responsibilities were restricted to "the routine and unimportant." They dealt with routine handling of mostly small value claims. For more important or complex matters, the claims representatives served as a conduit for information to supervisors, who made the decisions, something that was found to be a "routine and unimportant: role. In this instance, it was determined that the claims representatives were production, not administrative, employees....
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