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Kansas Federal Court Rules In Favor Of Employees, Allowing A Collective Trial On Overtime Claims

Often, employees shy away from approaching legal counsel about unpaid overtime claims because they believe their individual loss may be insignificant and retaining an attorney would cost more than the amount they are owed. A Kansas Federal Court ruling recently obtained by Davis George Mook LLC reaffirms that employees may join together and proceed as a group to recover unpaid overtime when other employees are treated in a similar manner.

In Charbonneau v. Mortgage Lenders of America, Judge Holly Teeter ruled in favor of collective litigation for two groups of loan officers despite the employer’s insistence that collective treatment would be improper.

The first group, which included team leaders who assisted their fellow loan officers, were misclassified as exempt. This means the employer improperly determined these employees were not eligible for overtime no matter how many hours they worked. Because the team leaders were not paid a pre-determined and guaranteed salary, the Court found they were each eligible for overtime pay as a matter of law—i.e., without the need for the jury to decide the issue. Given the common misclassification, only damages issues remained, and a collective trial was clearly appropriate.

The second group, loan officers without team lead responsibilities, were properly designated by the employer as eligible for overtime pay. However, the employer directed or expected them to work outside of the office on their cell phones (via calls, e-mails, and texts) without recording the time worked,resulting in unpaid overtime.The employer argued that collective treatment for these employees was improper for a number of reasons, including:

(i) the employer denied knowledge of the specific off-the-clock work being done by each loan officer;

(ii) the employer had a handbook policy that required all work time to be reported; and

(iii) some loan officers worked minimal amounts of time outside of the office.

The Court disagreed, noting that company e-mails and employee testimony were sufficient to demonstrate that loan officers were told to conduct work outside of the office and off-the-clock. The fact that the employer had a general timekeeping policy in its handbook was insufficient given the other specific and direct instructions to perform work outside of the office and the lack of any mechanism to report the time. Additionally, although some employees may not have worked as much overtime as others, this was an insufficient basis to deny a collective trial.

This ruling is just another reminder that employees have the right to proceed collectively to recover unpaid overtime, and Davis George Mook LLC is the right firm to assist you with all of your wage and hour needs. Please call us at (816) 569-2629 for a free consultation.

Think Your Employer Is Too Small To Be Covered by Employment Statutes.

Think that Bankruptcy Absolutely Shields Your Employer From Litigation.

Think Again!

In recent years, the Department of Labor has enacted various rules to shield large corporations and general contractors from liability arising from the actions of their subsidiaries, subcontractors, and temporary employment agencies. In January 2020, the Department of Labor (“DOL”) attempted to narrow the definition of “joint employer” underthe Fair Labor Standards Act (“FLSA”)—the statute that protects an employee’s right to minimum wage and overtime. In particular, the DOL proposed a new four-factor balancing test to determine when an employer may be considered a “joint employer.” Those factors are: whether the company: (i) hires or fires the employee; (ii) supervises and controls the employee’s work schedule or conditions of employment to a substantial degree; (iii) determines the employee’s rate and method of payment; and (iv) maintains the employee’s employment records.

To understand the impact of this proposed rule, we present you with two scenarios:

Scenario 1: Imagine that you work for a temp agency, Temp. Co., that hires you out to a large company, Large Corp. Although you get paid by Temp. Co., you go to work every day at Large Corp. and Large Corp. employees tell you what to do. Temp Co. determines your rate and method of pay and maintains your employment records—as most temporary employers do. Also, imagine that you work sixty hours a week but get paid for forty. That's illegal under the FLSA. You sue for the overtime wages you're owed—but Temp. Co. goes bankrupt. Can you also sue Large Corp.? Maybe. It depends on whether Temp. Co. and Large Corp. are a “joint employer” under the FLSA.

Scenario 2: Imagine that you are a carpenter working for a subcontractor with annual sales of less than $500,000. The subcontractor hired you, determines your rate and method of pay, and maintains all employment records as most subcontractors do. You work fifty-five hours a week but get paid for forty because the subcontractor is running low on funds. Under the FLSA, businesses with less than $500,000 of annual sales are not liable for unpaid overtime wages. Can you also sue the general contractor for wages owed? Again, the answer is maybe and depends on whether the general contractor and subcontractor are considered a “joint employer” under the FLSA.

As you can imagine, under the test created by the current Department of Labor, it would be almost impossible for the employees described to recover the overtime wages earned and owed to him or her.

Fortunately, on September 8, 2020, a federal district judge for the Southern District of New York entered an Order striking down this proposed four-factor test making it easier for employees to vindicate their rights. In State of New York, et al. v. The United States Department of Labor, et al., the State of New York and eighteen other states sued the Department of Laboralleging the proposed rule violated the Administrative Procedure Act. In striking the proposed rule, the Court found:

(i) The rule “clearly contradicts the text of the FLSA” which provides for liability if an entity “directly or indirectly” … “suffers or permits an employee to work.”
(ii) The rule was impermissibly narrow. The Court noted that the new rule focuses on the common-law definition of employment focusing on control which the FLSA expressly rejects by defining the verb “employ” expansively to mean “suffer or permit to work.”
(iii) The rule prohibited consideration of additional factors in further conflict with the FLSA and prior interpretations.
(iv) The rule was arbitrary because the Department failed to adequately explain its decision to depart from prior interpretations and would result in numerous employees who were unable to collect wages owed. The evidence provided to the Court indicated that the rule would cost workers $1 billion per year.

Depending on the outcome of the coming election, the Department of Labor may appeal this ruling. But for now, employees can feel more secure in their ability to obtain relief in situations like those above. Contractors and corporations are often found responsible for permitting—i.e., allowing—the work of temporary and subcontracted employees even if they do not directly instruct them on their daily activities, determine their pay rate, maintain their personnel files, or make ultimate employment decisions.

Missouri Court Upholds $1,000,000 Punitive Damages Award to Employee Sexually Harassed by Customers!

Your employer may be liable for punitive damagers if a customer or client sexually harasses you. This is because your employer has a duty under both Title VII and the Missouri Human Rights Act to maintain a work environment free from discrimination. When an employee suffers sexual harassment by a customer or client who the employee comes into contact with because of the employment relationship, and the harassment is sufficiently severe and pervasive to create a hostile work environment, the employer breaches its duty if it knows or should have known of the discrimination and fails to take prompt and effective remedial action.

In recent case called Diaz v. Autozoners, LLC, the Missouri Court of Appeals, Western District, upheld a $1,000,000 punitive damages verdict where the employee-plaintiff alleged she was sexually harassed by two customers and her employer knew or should have known of the harassing conduct but failed to promptly remedy the situation. Diaz v. Autozoners, LLC, 484 S.W.3d 64, 76-77 (Mo. Ct. App. 2015)reh'g and/or transfer denied (Dec. 22, 2015), transfer denied (Apr. 5, 2016).

If You Are Sexually Harassed at Work:

If you are sexually harassed at work, even by a customer or client, report it to your employer immediately. If you want to speak with a Sexual Harassment Attorney in Kansas City who can help you with this difficult process, call Davis George Mook today at 816-569-2629

Sexual Harassment & Discrimination Are Unlawful: Know Your Rights!

Did You Know?

It is unlawful to discriminate against any employee or applicant for employment because of his/her sex in regard to hiring, termination, promotion, compensation, job training, or any other term, condition, or privilege of employment.

Missouri and Federal laws also prohibit the following types of sex-based discrimination:

  • Pregnancy-based
  • Compensation
  • Sexual Harassment
  • Gender-based

Pregnancy-Based Discrimination

Employers, current or prospective, cannot discriminate against you on the basis of pregnancy, childbirth, or related medical conditions.

Compensation Discrimination

Employees are entitled to equal pay for equal work, regardless of gender. All forms of compensation are covered, including salary, overtime pay, bonuses, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, and benefits.

Sexual Harassment

Sexual harassment is a form of sex discrimination based on sexually explicit behavior. Unwelcome sexual advances, requests for sexual favors and other verbal or physical conduct of a sexual nature constitute sexual harassment when:

  1. Submission to sexual advances or conduct is made a term or condition of an individual's employment ("If you want to continue working here... ")
  2. Submission to or rejection of sexual advances or conduct is used as the basis of employment decisions ("If you want that promotion or pay raise...")
  3. Such conduct creates an intimidating, hostile or offensive working environment. This is where the sexual conduct is so pervasive or severe that it creates an abusive working environment.

Gender-Based Harassment

Another type of sexual harassment is called gender-based harassment. It does not involve explicit sexual behavior. This type of harassment includes epithets, slurs, and negative stereotyping of men or women, directed at a female or male employee. It may include denigrating or hostile written material about men or women posted or circulated in the workplace. Harassment due to gender is comparable to harassment due to race. If it is severe or pervasive enough to create hostile working environment, then it can violate the law.