Fair Compensation
An Overview of Wage and Hour Class Actions — an interview with Todd Jackson of Lewis, Feinberg, Renaker & Jackson, P.C
Jennifer J. Richardson
Posted Sunday, January 1, 2006
6 U.C. Davis Bus. L.J. 9 (2005)

Todd Jackson is a shareholder at Lewis, Feinberg, Renaker & Jackson, P.C. Mr. Jackson has significant experience litigating wage and hour and pension-related class actions on behalf of plaintiffs, including having served as co-counsel in cases against Perdue Chicken, Farmers Insurance Exchange, and Corrections Corporation of America. Prior to private practice, Mr. Jackson served as a law clerk to the Honorable Judith Keep of the United States District Court for the Southern District of California. Mr. Jackson is a graduate of Johns Hopkins University and of the Boalt Hall School of Law at the University of California at Berkeley.

Q: What is a "wage and hour" class action?

A: A wage and hour class action or collective action is a case in which a worker or group of workers sue their employer on behalf of a larger group of employees in order to try and collect unpaid overtime. Under federal law, the Fair Labor Standard Act (FLSA), the mechanism for suing as a group allows all similarly situated employees to "opt-in" to the lawsuit. When you have an FLSA lawsuit, it is called a "collective action," and under the FLSA, you send a notice to employees, called the Hoffman-LaRoche[1] notice, once the court finds that the individuals are similarly situated and they should get notice of the lawsuit and get the right to participate in it. Individuals then option to join the lawsuit by sending in their consents. For state wage law violations, the class action mechanism is either Federal Rule of Civil Procedure 23 or its state law analogue. In a Rule 23 class action, which is sometimes combined in the case with an FLSA collective action, if a Court certifies the class then the members of the class are typically participants in the lawsuit unless they "opt-out" of the class by writing to the Court to say that they do not want to participate in the lawsuit.

As for the substantive law, there can be several reasons why workers claim to be entitled to overtime or other pay. There are some cases, called misclassification cases, where a group of workers will say that under either federal and/or state law they are entitled to be paid for the overtime they worked and that they were wrongly misclassified as exempt from overtime laws. An example of that type of case would be an employee who is given a fancy title but whose day to day work is still non-exempt work. For instance, a grocery worker may be given the title of "assistant produce manager" but when you look at what they are actually doing at work, they still spend virtually all of their time loading, caring for, and throwing away vegetables. That person is entitled to overtime under the law, regardless of the title the employer gives them. There are also cases referred to as "off the clock" cases where there are individuals who are asked to perform certain duties, or their employer knows they are performing certain duties, during time when they are not being paid. For instance, an employee might be required to clean up a deli work station prior to officially starting work, then be told to clock-in to be paid for work only after they had cleaned up the station. That time cleaning up is work time and is compensable under the law.

These cases can have dramatic results for the workers and the employers. If workers were misclassified, and if that misclassification is found to have been "willful" under the FLSA, then workers are entitled to 3 years of back overtime wages. This can add up to thousands, even tens or hundreds of thousands, for individual workers. For employers, the overall liability, depending on the number of employees misclassified, can be many millions.

Q: In general terms, how does the Fair Labor Standards Act (FLSA) regulate overtime compensation pay for workers?

A: In very general terms, under the FLSA, workers are entitled to be paid overtime as a matter of course unless you fall into one of the narrow exemptions from the law. Those individuals who are not entitled to get overtime are referred to sometimes as exempt workers. Under the FLSA, the courts should narrowly construe those exemptions so that they only apply to discreet groups or individual workers. There are actually a number of different exemption classifications. There is the executive exemption which is for managers. There is the administrative exemption which is for individuals who run a business on the higher level and decide what the management policy of the company will be, as opposed to the production workers who do the day-to-day work for the company, often while closely supervised. Production workers are those who make the product that the company produces and they do not fall under the administrative exemption. There is the professional exemption-for instance doctors and lawyers. The outside sales person exemption is an old-fashioned exemption that involves individuals who do sales door-to-door, away from the office. Computer personal, where they do highly specialized computer design-type work such as creating computer systems or writing complicated software, are also exempt. And, under the new U.S. Department of Labor regulations, highly compensated individuals, who make more than a $100,000 and have characteristics of one of the other exemptions mentioned, are also exempt. Other than those narrowly construed exemptions, everyone else should be paid overtime under the FLSA.

There are also a number of state wage and hour laws that vary from state to state. California has strong wage and hour laws. Some of those [state laws] are modeled on the FLSA and some vary from the FLSA in specific ways.

Q: What is an example of the extra protections California state laws offer workers?

A: There are a number of ways in which California has stronger overtime laws for employees than the federal law. One example would be that California has very strong rights to a full meal break for non-exempt employees. Another example would be that in California you not only get overtime for any time you work over 40 hours in a week, but you also get overtime for any time you work more than 8 hours in a day.

Q: What was the original purpose of the FLSA?

A: The FLSA was passed in 1938. The idea was that everyone would be entitled to overtime if they worked over 40 hours a week. Congress wanted employers to hire more people who would work fewer hours. The government incentivized employers to hire more workers, rather than overworking their existing workers, by requiring premium pay for overtime. That was the initial notion behind it.

Over the years, the exemptions have been read by the courts to apply to a modern workforce. For instance, the administrative exemption, in the factory era, was split between those few people who decided the policy of the business and the workers who did production or "line" work. Production work now includes information workers in the service industries, as well as the factory workers that were more common back in 1938. So while the non-exempt workers are not traditional factory workers who produced a widget, they are now production workers who produce a service, and are thus entitled to overtime pay. So, there may be a computer worker or an insurance claims representative, who does not actually make a widget, but produces a service. That service is considered production work under the law.

Q: What is the Department of Labor's (DOL) role with the FLSA?

A: The Department of Labor both has a role in promulgating regulations and an enforcement function, which gives it a right when an employer is violating the law, to bring a lawsuit to enforce the regulations under the FLSA. Additionally, private parties often bring lawsuits under the law to enforce the requirements of the FLSA.

Q: What is a lawsuit filed for overtime compensation under FLSA really about?

A: Simply put, it is a lawsuit where workers demand to be paid at the going rate for all the time they work. The lawsuit makes sure that companies do not overwork people. In the misclassification context, if an employer can simply give someone a fancy title, pay them a low salary, then work them 60 hours a week, the companies are incentivized to overwork the employees who are precisely the ground level workers that the laws are designed to protect. If those folks work more than 40 hours, they are entitled to be paid an overtime premium. These cases are as much about preserving a reasonable life for workers as they are about making sure that workers are paid a premium for their overtime.

Q: On August 23, 2004, the DOL announced the Fair-Pay rule under the FLSA to change requirements for overtime eligibility. Could you explain the changes?

A: There are a number of wording changes, but the preamble to the new regulations says that these do not change the regulations. The regulations essentially remain similar and the changes are just clarifications in some areas. There are some wording changes in the regulations, which are likely too technical to be interesting to a general audience. For example, there is now an exemption for the highly compensated - those who make over $100,000 - as long as they have some of the other exempt duties.

Q: What has been your involvement with overtime suits?

A: I have been involved in a number of overtime lawsuits, often as co-counsel with a number of plaintiffs' law firms being involved. Those include overtime lawsuits for "off the clock" cases representing, for instance, a group of chicken workers who alleged that they had not been paid for the time it took to put on and take off their protective equipment-that would be one example. Another example is a case against Farmers Insurance on behalf of claims representatives who allege they were misclassified and were entitled to overtime. We have also had lawsuits involving low-level technical computer workers who were entitled to overtime.

Q: From your experience thus far, what trends do you see developing in wage and hour class actions lawsuits?

A: I am not sure I want to make sweeping statements about overtime litigation. There have been a number of lawsuits recently claiming that computer technical workers, the low level computer workers who maintain and support computer systems, have been misclassified and are entitled to overtime. It may be that the computer industry is going to have to take a hard look at the way they classify workers as exempt from overtime.

Q: Is there anything workers can do to protect themselves from not being compensated for overtime?

A: I think it is important that they know what the rules are about overtime. They can get the basic rules from a website like www.workplacefairness.org. If they have any questions, they should contact an attorney or the Department of Labor to find out if they are in fact entitled to overtime.

Q: What can employers do to ensure their workers are fairly compensated?

A: Endeavor to make sure people are classified correctly and that they are being paid for all the time they work.

[1] Hoffman-LaRoche Inc. v. Sperling, 493 U.S. 165 (1989).