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Wednesday, August 21, 2002

Workers' suits seek 'fair pay'


Surge in claims reviving overtime debate

By Adam Geller
The Associated Press

        NEW YORK - There were years, Omar Belazi says, when he willingly logged 65-hour weeks, stayed late to vacuum the store's floor and clean the restroom, or surrendered his Sundays to hit sales targets.

[photo] Omar Belazi, shown here in his family's gas station minimarket in Santa Barbara, Calif., led a lawsuit against RadioShack Corp.
(The Associated Press photo)
| ZOOM |
        But a decade later - after Mr. Belazi began asking his wife and father-in-law to clean his RadioShack store without pay to help him keep up - he grew tired of waiting for the payback.

        “It gets to be very stressful, very tiring. . . . You just get up and go to RadioShack and go home and go to sleep,” said Mr. Belazi, a former store manager for the electronics chain in Santa Barbara, Calif. “They gave me all these awards (for sales achievement), but it didn't do me any good. They didn't pay me.”

        A growing number of workers like Mr. Belazi are demanding more from their employers. The result is a flood of lawsuits by employees, many in arguably “professional” jobs, who accuse their companies of cheating them out of overtime pay.

        The surge in claims - some resulting in multimillion-dollar settlements - reflects an uptick in a long-simmering debate over overtime pay and who is entitled to it.

        In part, that debate reflects the fact that Americans are working more hours - longer than their counterparts in every other industrialized country - and that employers are trying to stretch productivity. But it also hinges on changes in the jobs people do and what they're called.

        With manufacturing jobs dwindling, more workers now toil for service-industry employers who pay salaries and bestow people with hard-to-define titles such as “analyst,” “manager” and “administrator.”

GEAE SUED OVER WAGES
   GE Aircraft Engines is being sued in U.S. District Court in Cincinnati by two employees who accuse the jet-engine maker of intentionally classifying workers as managers to avoid paying them overtime.
   The suit, which seeks class-action status on behalf of current and former GEAE employees, claims the company has violated federal and state labor laws. The suit seeks back pay and damages.
    Plaintiffs are Albert J. Carnevale, a West Chester resident and 27-year GE employee, and Franklin R. DeNyse, a Fairfield resident and a 13-year employee.
    A GEAE spokesman said the lawsuit was “without merit. GEAE will vigorously oppose it.” The company said it complies with all federal and state wage and hour laws, and denies it failed to pay overtime to eligible employees.
        Federal law says employers don't have to pay overtime to salaried workers in executive, administrative or professional jobs. But the law, the Fair Labor Standards Act, which has undergone only limited revision since the 1970s, relies on some outdated salary figures and terminology that leaves room for broad interpretation. California, which has become a hotbed of overtime battles, has a law that grants overtime pay to a broader group of workers.

        That has helped stir clashes between employers and employees with very different ideas about the definition and responsibilities of a professional and what constitutes fair pay.

        RadioShack agreed in July to pay $29.9 million to settle a lawsuit led by Mr. Belazi on behalf of 1,300 current and former California store managers. The workers contended they were owed overtime because the company made virtually all managerial decisions at higher levels, and mandated that they spend most of their hours as salesmen.

        The payment by RadioShack is the most recent in a series of very large settlements in California. This spring, Starbucks agreed to pay a group of California store managers $18 million to settle an overtime suit. SBC Pacific Bell agreed last December to pay a group of engineers $35 million.

        “It's become the cause of action du jour in California,” said Mark Hill, senior vice president and general counsel for RadioShack, which has denied fault and notes that its store managers' average pay is $60,000 a year. “These are not underpaid hourly workers who are being mischaracterized as salaried workers simply so an employer would not have to pay for long hours worked.”

        Elsewhere, drug-store chain Eckerd Corp. paid $8 million last year to settle a suit brought by a pair of former pharmacists at a store in Moss Bluff, La., on behalf of nearly 1,100 others. The suit accused Eckerd of docking the druggists' supposedly fixed salary if they worked less than 40 hours. But the company would not pay them more when they worked beyond their scheduled shifts, the workers said.

        “We didn't get paid for anything over 40,” said Kevin Soileau of Florien, La., one of the pharmacists who filed the suit. “How can you tell me I'm a salaried employee if I have to sign a time sheet?”

        Eckerd denies liability and says it settled merely to avoid the expense of a lengthier court battle.

        More recently, a federal judge in Minnesota ruled that more than 2,000 “loan originators” for Conseco Finance Corp., who sell financing by telephone, were entitled to overtime pay.

        Federal law exempts retailers from having to pay some workers overtime, as well as those who employ largely unsupervised “outside sales” workers. But the court ruled in March that Conseco's workers - who earned a base salary plus commissions - fell outside both exemptions.

        Other lawsuits accuse companies of deliberately depriving hourly workers of overtime pay by forcing them to work off the clock.

        For example, a pair of sales assistants at Credit Suisse First Boston in Miami - secretaries to the firm's stockbrokers - sued last year.

        The workers accuse the company of having an “unwritten rule” against overtime pay, exemplified by managers who told workers long hours were “the nature of the business.” Credit Suisse declined to comment on the suit.

        Wal-Mart Stores Inc. is fighting 38 different state and federal lawsuits filed by hourly workers in 30 states, accusing the company of systematically forcing them to work long hours off the clock. Wal-Mart settled another such suit in Colorado two years ago, reportedly for $50 million. The terms of the settlement were confidential, and the company will say only that the actual amount is far less than has been reported.

        Last year, workers filed 79 federal collective-action lawsuits seeking overtime pay, surpassing for the first time class-action suits against employers for job discrimination, according to a recent report to the American Bar Association. Hundreds more overtime lawsuits have been filed in California courts the past two years.

        Labor advocates and lawyers for workers say the suits show that the Fair Labor Standards Act and state labor laws remain vital in protecting workers.

        “Employers typically want to put everybody into an exemption (from overtime) if they possibly can,” said Robert Thompson, a Tustin, Calif., attorney who represented the RadioShack workers.

        But employers argue that outdated labor laws have become a weapon for attorneys to win undeserved overtime pay for already highly paid employees.

        The law “was put in place to make sure workers at the low-end of the pay scale are paid a fair day's wage for a fair day's work — and it's gotten away from that,” said Timothy Bartl, assistant general counsel for the Labor Policy Association, which lobbies on behalf of corporate personnel officers.

        Employers may soon get part of what they're after. The Department of Labor is pledging to update regulations to clarify which workers are covered by the law and focus its protection on those in low-wage jobs.

       



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- Workers' suits seek 'fair pay'
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