Scary wage and hours cases continue to fill the news headlines with big settlements or potential damages against employers who do not pay correctly under the Fair Labor Standards Act (“FLSA”).
Huge Settlements or Awards Reached
Multi-million dollar settlements of claims for unpaid wages under the FLSA have recently been reported.
One is for about $29 million, including $23 million back wages and the balance in attorney’s fees and costs. It involves the settlement by Walgreen Co. of nine California wage and hour collective actions consolidated into one action. In re Walgreen Co. Wage and Hour Litigation. Pharmacy and retail store clerks alleged that employees were not provided adequate breaks under California law, they were not paid overtime for time spent in mandatory security checks, they were not provided meal or rest periods that were not free from work (and thus should have been paid time), they were not reimbursed for expenses, and they were not provided proper itemized wage statements. The case covers time for workers going back to May 2007. The settlement was agreed to back in August of 2013, but it has taken this long to finalize details to be approved at a settlement hearing on May 12, 2014, before a California federal court.
Another case award entered after trial, involving Tyson Foods, comes in at almost $19 million. Again, the issue was non-payment for off-the-clock work. The “donning and doffing” time pay was the question, that is, pay for the time employees spent putting on and taking off special protective clothing and equipment before they went on the production floor. The court in the case held, if the gear is required by the employer, this time should be compensated for. This case is Manuel Acosta v. Tyson Foods Inc.
It was filed in 2008, the class of workers was certified in March 2011, the case tried in January 2013, and on January 30, 2014, the federal judge adjusted the back-pay award for opt-outs and temporary workers, and the final tally with liquidated damages and back wages reaches $18.8 million. The amount of attorney’s fees and costs to be awarded to the plaintiffs still has not been determined!
U. S. Supreme Court to Hear Other Unpaid Wages Case
The Supreme Court agreed to hear a case involving a company which hired temporary workers at the Amazon warehouse, who were not paid for lengthy delays getting into the workplace because of security checks. The contractor, Integrity Staffing Solutions, claimed requiring pay for such time would require thousands of employers “to modify their time-keeping systems or eliminate security screening altogether”. The Ninth Circuit federal court of appeals held the time was compensable because it was required by the employer and benefitted the employer (the screening was to prevent theft). The Supreme Court has agreed to review the case to sort out this issue. The case to watch is Integrity Staffing Solutions, Inc. v. Jesse Buck and Laurie Castro, U.S. Supreme Court, No. 13-433.
Lessons for Employers
Several lesson for employers come out of these cases:
- If you have employees perform work during meal or rest breaks, they must be paid for the breaks.
- If you require employees to wear protective gear or special clothing for the job, they must be paid for the time putting on and taking off the gear or clothing.
- If you require security screening, or other check-in procedures, for employees, they may well be entitled to compensation for time spent doing those things. This applies to logging into computer systems, and many other preparatory work activities. The Supreme Court will decide this, but don’t be surprised if they find the time is compensable.
- These cases can take many years to be resolved. The cost to an employer in terms of its own manpower lost and attorney’s fees is pays to defend the lawsuit also have to be added to the costs of the lawsuit for employees’ unpaid wages, liquidated damages, and plaintiff’s attorney’s fees. This makes wage and hour lawsuits that much more catastrophic.
The old adage often applies: don’t try to be a penny smart by not paying for minor amounts of time and end up a pound poor when the back wages, doubling for penalties under the FLSA, and possibly attorney’s fees are all added in. True, the really big dollar awards or settlements are against major employers, but the result can be just as devastating to a small business.