An Overreach on Overtime?
Be a Google Follower
Obama: Small Business Key for Recovery
Hiring Freeze
Foremost Superior Marble Inc. executives wanted to do the right thing when they paid bonuses to employees for doing a good job.
The Sacramento, California, company got sued in return.
Three employees, backed by a San Jose attorney, claimed the extra money increased their pay rate enough to bump up the amount of overtime compensation they should have received. The lawsuit dragged on for more than 18 months before the company settled.
Documents are pending, with a final legal tab of about $400,000.
“We got hosed pretty good,” Foremost president Paul Howard said. “We had a cushion for the bad economy, we know it goes up and down, but not for something unforeseen like this.”
Foremost is not alone. Overtime complaints, a staple of employment law, are moving down the food chain from big corporations to midsize and small employers, sources say.
Dozens of individual cases have been filed in California against Dallas-based retailer Tuesday Morning Inc. since an appeals court tossed out a class action last year. Tuesday Morning, a closeout merchandise retailer, has seven local stores. Five Sacramento area lawsuits have been filed since December alleging that workers were not paid overtime for extra hours worked.
Capital Fitness Network LLC, doing business as Gold’s Gym in Sacramento, Natomas and Elk Grove, California, was served with two lawsuits in January on behalf of seven former employees. They allege failure to compensate employees for hours worked and failure to pay overtime wages, among other complaints.
Both companies declined comment due to the pending litigation, but lawyers say these cases are typical of the trend toward smaller employers.
“In the past several years, it’s been larger clients,” said Cassandra Ferrannini, a partner at Downey Brand LLP in Sacramento. “As a practical matter, it’s difficult to know every single rule. Employment is heavily regulated, and there are a lot of pitfalls.”
As large employers become more savvy, lawsuits move on to smaller targets, she said.
“There are only so many class actions you can bring against Wal-Mart before you’ve exhausted the pool,” added Ferrannini, who represents Gold’s Gym but declined comment on those cases.
‘Gosh, I Was Entitled to the Money’
Wal-Mart paid $352 million to settle 63 cases in 2008, following allegations the giant retailer forced employees to work “off the clock” without appropriate compensation.
Federal Express was ordered to pay California drivers $14.4 million in October 2008 after misclassifying them as independent contractors.
Class actions against the “Big Four” largest accounting firms are winding their way through the courts, including one filed by the Sacramento firm Kershaw Cutter Ratinoff LLP against PricewaterhouseCoopers LLP.
This case alleges unlicensed accountants were entitled to overtime but not paid for it. The trial court ruled in favor of the workers, but the company has filed an appeal, and a decision isn’t expected until late next year.
“Our firm, by and large, hasn’t sued small businesses because, frankly, the economics don’t pencil out,” Bill Kershaw said.
Others have.
“A lot of larger companies have cleaned up their act with regard to wage-and-hour law,” said Anthony Perez, a plaintiffs’ lawyer in Sacramento. “Smaller companies are more and more exposed when they try to sweep it under the rug and not compensate employees for overtime required by the labor code.”
Sometimes class actions fail and end up in scores of individual lawsuits.
Comments
If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.




