• Understanding Different Kinds of Wage Theft and How Workers Can Pursue Their Rights

Video Transcript

Jason Thompson: My name is Jason Thompson with the law firm of Sommers Schwartz. Today I have with me Rob Ashe, a lawyer of our firm and Veronica Stewart, a paralegal at our firm. Today we’re going to talk about wage and hour cases or what we commonly refer to as wage theft.

What is Wage Theft?

Jason: Wage Theft Wage theft cases are cases in which workers are not being paid for the work that they’ve done.

What Are Some Examples of Employment Jobs Where People Aren’t Paid Overtime Properly

Jason: Rob, can you give us some examples of employment jobs where people aren’t paid overtime properly?

Rob Ashe: Sure. You might think of people that work in a call center, customer service representatives, or servers in a restaurant, a chain of restaurants that share tips and things like that. Another example might be a pizza delivery driver or an armored truck driver. So there’s really a lot of different groups of people that we’re looking at. But generally, when we approach one of these cases, we’re looking for groups of people that are similarly situated to each other.

Does the Federal Fair Labor Standards Act Apply to Overtime Pay?

Jason: And what does the law require, whether it’s federal or state law, for people to be paid properly? Can you give us some examples of what the law requires employers to comply with?

Rob: Sure. Well, the first thing that comes to mind is the overtime requirement of the Fair Labor Standards Act. And what that requires is that any time a nonexempt employee is working over 40 hours a week, they need to be paid an overtime premium of 1 and 1/2 times the regular hourly rate.

Do States Have Their Own Overtime Laws?

Jason: Do some states have different thresholds for payment overtime?

Rob: That’s a good question. And there are many states, for example, California. Not only does California have a requirement for 40 hours a week, but they also have a daily overtime requirement. So anytime you work over eight hours in a day or even 12 hours in a day,
there are different premiums associated with those daily overtime requirements.

Are Workers Entitled to Be Paid for Meal and Rest Breaks?

Jason: Does the law protect things like taking a rest or having lunch?

Rob: Absolutely. In certain states, there are many requirements for taking rest breaks at certain intervals and also taking meal breaks. Meal breaks, we run into a lot of problems with when employees are required to work on their meal breaks. If it’s an unpaid meal break, the employee has to be relieved of all job related activities.

Jason: Veronica, as a paralegal, I presume you have a lot of contact on a day-to-day with Sommers Schwartz clients.

Veronica Stewart: I do.

What Can Workers Expect When They Participate in a Class Action Lawsuit

Jason: Can you give us an idea of what their concerns typically are in joining a lawsuit for wage theft?

Veronica: Primarily their concerns have to do with the length of time of the lawsuit, what is required of them to participate in a lawsuit, and whether they against if they are still employed by that employer.

What Does a Worker Have to Prove When Bringing a Wage Theft Claim?

Jason: Give us a little idea of what is required of an employee who wants to sue for their unpaid wages.

Veronica: The primary requirement of a person coming forward with a lawsuit is to have been wronged in some way. That’s first and foremost.

Jason: What makes that decision? How does that all work?

Veronica: It’s based on things like how much damages they have actually incurred, the statute of limitations, how long it’s been since that incident happened.

Should Workers Involved in a Lawsuit Against Their Employers Be Concerned About Retaliation?

Jason: Veronica, what are some of the client concerns when it comes to retaliation?

Veronica: Mostly the client is concerned about being fired or a change in their pay.

Jason: That’s understandable. When we’ve had cases in the past, we’ve had to explain to the clients that, number one, most employers are represented by competent legal counsel. They’ll tell them that retaliation or even adverse action such as reducing hours or making their life miserable, is completely prohibited once a lawsuit has been filed. And I know we’ve had examples, very rare, where an employer has done that. And that has given rise to a whole new cause of action.

Jason: Because under the statute we were able to then file a new claim for that retaliation.

Rob: Right. And it can be a very big problem for an employer. Because not only at that point is an employer fighting the merits of a lawsuit, but the statute under the Fair Labor Standard Act, Fair
Labor Standards Act, provides for attorney fees to a prevailing party. So if an employer goes off and does something stupid like fires an employee for bringing a lawsuit, they’ve got a really tough uphill climb to defeat the retaliation lawsuit, which also carries with it attorney fees.

How Do Lawyers Get Paid for Representing workers in Wage Theft Lawsuits?

Jason: Rob, you mentioned attorney fees in your last answer. How is it that the lawyers get paid in these cases?

Rob: So the Fair Labor Standards Act provides for attorneys fees to be paid to the prevailing party. So one way in which an attorney can get paid is for them to be the prevailing party and then they submit their fee petition to the other side for the other side to pay the attorney fees. The other way that an attorney could get paid is by working off of a contingency fee, where they take a cut
of what is recovered on behalf of the class. Both of these are advantageous to a plaintiff because many of the people that we represent don’t have the financial capability to maintain a lawsuit
against a major corporation. Both of these options then allow us to allow them to bring a lawsuit and not have to worry about the finances associated with it.

In Which States Has Sommers Schwartz Represented Wage Theft Victims?

Jason: Sommers Schwartz has been working in this field for over 10 years. Can you give us an idea of the states where we are representing clients currently?

Rob: practical matter, we represent clients all over the country in all states. But some states have stricter laws for overtime and minimum wage and things like that. For example, New York, Nevada, California is a big one, Washington state. In those states, we see more cases because there are more laws to protect the employees.

How Much Time is Required of a Plaintiff Who Takes Part in a Wage Theft Class Action?

Jason: Veronica, in your experience, do the clients think that these lawsuits take up a lot of their time?

Veronica: No. Some cases there’s very little for a client to do. However, in other cases, a client may have to appear for an oral examination, answer questions, provide documents, and be available to us.

Jason: And if you have an estimate over the life of a one or two-year lawsuit, about how many hours does the typical client have to set aside to assist the law firm?

Veronica: Less than five.

How Prevalent Are Wage and Overtime Violations in the United States?

Rob: Jason, how prevalent are these wage violations that we’re talking about happening in everyday America?

Jason: It’s hard to quantify because most go unreported. If you think about it, people have to have a job. They have to have a paycheck to provide for the family, and the last thing you want to do is jeopardize your livelihood, your ability to provide for your family by complaining to an employer who has the absolute authority to fire you. So first of all, it’s hard to quantify. But if you think about running a business, whether it’s a restaurant or a plant, you have fixed costs, you get your rent, you have things that you really can’t change if you want to stay in business. But what’s the one thing that you can control? That’s your labor costs. So wage theft is prevalent and it’s a tempting act for an employer to take to save costs and the one variable they can which is labor. And it’s the most vulnerable component of their workforce because they can’t complain. So these cases are very important, which is why there’s the
attorney fee provision that we talked about earlier.

Rob: And the liquidated damages provision too, for a willful violation.

Jason: That’s an excellent point. So is the overtime may amount to $1,000. And under the law, as a penalty to discourage this, that gets doubled. So someone may have what they think is a fairly small case and it could end up becoming quite sizable. And for most people, $2000 makes a big difference.

Is An Employer Liable Only if It Willfully Violates Wage and Overtime Laws?

Rob: So, Jason, we talked about the willful you mentioned. It doesn’t have to be a willful violation for there to be a violation of the Act. An employer may just not realize that they’re violating the Act and the employee would still have a claim, right?

Jason: That’s absolutely true.

When the original law was passed, it was a jobs creation bill that was born out of the Depression. And the Fair Labor Standards Act first and foremost is to make sure people are employed. And so fault, willfulness, malice, none of that is required for somebody to recover lost wages. All that’s required is that you have work in your job and you haven’t been properly paid. So the law does
provide double damages as we’ve talked about for willfulness. But in order to have a case and be owed your wages, that is not part of the burden to prove something like willfulness or malice.

Rob: Right. And the purpose, I think it was FDR who said, an honest day’s work for an honest day’s wage. Yeah.

Veronica: I’d just like to add, Jason, that our clients are thrilled that they brought an action for something that they thought that could never happen for them. They weren’t being paid properly. They knew something was wrong. And in the end, it was a win.

Are Employers Required to Pay Employees for “Off-the-Clock” Work?

Jason: Let’s talk about the different types of jobs settings where we find violations. One of the big ones that we have, we call off-the-clock work. What does that mean?

Rob: Well, off the clock work is any time an employee is doing work-related activities and not being compensated for them. For example, in a call center, someone that is booting up computer programs and shutting down computer programs before they get clocked into the timekeeping system. Another example could be drive time. An employer is not paid in California, if they’re under the exclusive control of the employer and they’re driving, they’re not getting paid for that, might be another violation. If an employee is answering emails, writing emails, off the clock, I mean there’s a variety of different ways that an employee can be doing work that benefits an employer and not getting paid for it. That’s what we mean by off the clock.

Jason: And so that’s the real question is whether or not the worker is engaged in the work, the activity that they do on a day-to-day basis and whether they are being paid while they’re doing that work.

Rob: That’s right.

What Kind of Wage Theft Do Restaurant Workers Encounter?

Jason: Another good example that we come across involves restaurant workers, not only do they have off-the-clock work, but some of those people are paid through tips. Can the tips become a problem for the employer and are cases filed to recover tips?

Rob: Yeah. We see that quite a bit actually. Tip pooling is common in the industry. But there are many rules that are associated with tip pooling. The employers oftentimes don’t know the rules and many times don’t follow the rules. And if they don’t follow the rules, then it’s an improper tip pool and that’s a violation of the law.

What Types of Wage Abuses Do Nurses and Healthcare Workers Experience?

Jason: Some industries we see more often than others. For example, the healthcare industry, we’ve had a lot of cases that involve health care workers. One example involves nurses. And nurses are put under a tremendous amount of pressure to work without having been paid properly. We know we’ve got cases where they’ve had to work off the clock, and that usually involves their lunch period. So many nurses have reported to us that they work through their lunch period, but their employer actually docks them that half hour and they’re not being paid for it.

Rob: Nurses work long hours generally too. Sometimes they’re working three 12 hour shifts. Well, a 12-hour shift in California could be a daily overtime violation.

Jason: Call centers I know were mentioned earlier. And we’ve had a lot of examples of call centers. We’ve had health care. What else have we seen?

Veronica: Food processing plants.

Jason: Let’s talk about those for a moment.

How Do Food Processing Workers Fall Victim to Wage Theft?

Jason: What are the violations in food processing plants?

Veronica: Well they’re donning and doffing.

Jason: What does that mean?

Veronica: That means putting on protective gear before and after your shift or before and after your lunch.

Jason: And they do that without being paid?

Veronica: Yes. They do that with being paid.

Rob: An example of another off the clock word claim. Exactly.

Are Manufacturing Workers at Risk for Wage and Overtime Violations?

Jason: We’re in Michigan. It’s a manufacturing center, much like the Midwest is. We would have probably a lot of workers that are working in tool and dye shops or manufacturing plants, fabrication facilities, that are being asked to come in early, stay late. All of those represent examples of wage theft as well.

Rob: Absolutely. You know, in both off-the-clock settings and you’d be surprised, many times employers tell their employees, we’re not going to pay you overtime premiums. Or they misclassify them, and when I say misclassify, what I mean is they tell people that they’re not entitled to overtime when they actually are entitled to overtime.

Are Their Overtime Violations Present in the Gig Economy?

Rob: So job market is changing, Jason. And one of the things that we’re seeing a lot of is things like Uber ride-sharing or Lyft. And what they, the quote-unquote gig economy, are there violations present in the gig economy?

Jason: We have started to focus on that area because what the employers often do is classify those workers as independent contractors. So why is that important? Well, as an independent contractor, you’re not entitled to any of the protections under the law that we’ve been discussing. That means there’s no protection for meal breaks, rest periods. There are no protections for minimum wage. And the big one is, there’s no protection for overtime if you’re working over the threshold number of hours. In addition to that, a lot of the independent contractors have to provide their own tools, their own supplies, there’s no reimbursement for any of that. And the problem the employers run into is that if they exercise control, sufficient control over those workers, then they’re not actually independent contractors. For example, if they have to work a set number of hours, if they have limitations on the different types of jobs they can take if there’s a lot of control over exactly how they perform their, job they’re really employees. And as we know, the law applies, and all of those workers are entitled to those protections.

Rob: It’s a legal determination. The determination of the employer is irrelevant.

Jason: That’s a great point. A lot of times we find our clients have signed contracts where they specifically waive the right to be an employee and they acknowledge that they’re an independent contractor and the value of those is zero.

Rob: Yeah. It doesn’t matter.

Are Arbitration Agreements That Limit How Workers Can Pursue Their Rights Enforceable?

Veronica: In addition to waiving those rights, they sign arbitration agreements.

Jason: Well, that’s a great question. So currently in America is a big debate over whether or arbitration agreements, which means you can’t go to the courts and you have to go to arbitration in a private setting are even enforceable in an employment setting. Our Supreme Court is currently sitting on the case and going to decide hopefully in the next six months, that may very well affect whether or not arbitration agreements and class action waivers, what we typically do, are even enforceable in the employment setting.

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