Bruister ESOP Verdict - 6.49 Million Dollar Judgement

A federal judge has found a Mississippi business owner liable for $6.49 million to his former employees, including many living in Tennessee, for overcharging for company stock. 

Bruister & Associates, Inc. was a subcontractor for DirecTV that performed installation services.  Its owner, Herbert Bruister, set up an Employee Stock Ownership Plan (ESOP) to sell all of the stock in the company to its employees, and named himself and two close associates as plan trustees.  Two former employees at the company’s Nashville office, Joel Rader and Vince Sealey, brought suit on behalf of the ESOP claiming that the trustees manipulated the sale process and failed to protect the plan from financial abuse as required by the Employee Retirement Income Security Act (ERISA). 

After a 19 day trial, United States District Judge Daniel Jordan found that the trustees had breached their fiduciary duties and improperly influenced the valuation of the company, which caused employees to pay far more for stock than what it was worth.  The court also found that defendants had engaged in “egregious misconduct” and entered an injunction preventing the trustees from acting on behalf of ERISA-covered plans in the future.    

 “I heard rumblings that the ESOP was bogus and that employees would not be getting their promised retirement benefits,” said Rader.  “I felt like the company was cheating the employees and something needed to be done.”

Sealey added, “The company kept ignoring me when I tried to sell my stock, so I thought this must be some kind of scam. I am happy with the decision but really feel like people should be going to jail.” 

Chuck Yezbak, Rader and Sealey’s attorney, said, “They represented the interest of all plan participants even when they didn’t have much to gain personally.  This case is a good example of workers standing up for their rights and holding people accountable.” The court also noted that “throughout this litigation, including trial, [Rader and Sealey] advanced the ESOP’s general interests over their own” and that they represented the plan well.

Rader and Sealey were represented by Nashville based Yezbak Law Offices, Gary Greenwald of Keller Rohrback, P.L.C., and Mississippi attorney Louis H. Watson.  The U.S. Department of Labor filed a separate lawsuit. The cases were combined for trial.

Many of the company’s technicians filed a separate lawsuit, which is pending in federal court in Nashville against both Bruister & Associates, Inc. and DirecTV, alleging they were required to work off the clock without pay.  Approximately 1800 employees joined this lawsuit and are also represented by Yezbak Law Offices. 

McDonald's Workers Allege Wage Theft

Last week, McDonald's workers in three states filed seven lawsuits alleging that the company is systematically stealing wages through illegal pay practices including failure to pay overtime, forced work off the clock, and erasing hours from their timecards.  The lawsuits, filed in California, Michigan and New York, also accuse McDonald’s of denying workers meal periods and rest breaks, and requiring employees to buy their own uniforms or pay to clean those uniforms -- practices that brought the workers pay below the federal minimum of $7.25 per hour.  Five of the seven lawsuits also name some of the company’s individual franchisees as defendants.  Two lawsuits filed in Michigan against McDonald’s and the Detroit-area franchise owners, allege that the restaurants told the worker to show up to work, but then ordered them to wait an hour or two without pay until enough customers arrived.  

These allegations are not unique to McDonald's -- these are the kinds of complaints our office often hears from restaurant employees and workers at car washes.  In fact, they are similar to the facts in several of our current and recent cases.  The McDonald's cases are remarkable for their potential size.  Just one of the cases was filed against the roughly 100 McDonald’s restaurants in California that are company-owned and operated.  That lawsuit seeks to be a class action representing 27,000 current and former McDonald’s employees.

If you want to learn more generally about these kinds of pay practices and their legality, visit our website here.

 

Celine Dion Sued for Failure to Pay Employees Properly

In a lawsuit filed in federal court last week, a handyman who was employed by Celine Dion and her husband at their home in Florida claims that he (and other employees) didn’t receive overtime pay to which he was entitled under the Fair Labor Standards Act (“FLSA”).  Keith Sturtevant claims that Ms. Dion cheated him out of pay for several years by classifying him as a “manager” exempt from overtime pay.

Generally speaking, under the FLSA most employees must be paid at least the federal minimum wage ($7.25 per hour) for all the hours they work in each workweek, and overtime pay of one and a half times their regular rate of pay for each hour they work over 40 in that workweek.  The FLSA provides exemptions from these general rules for certain executive or management employees.  To qualify for the executive exemption, the employee must (1) be compensated on a salary basis of not less than $455 per week; (2) have a primary duty of managing the enterprise or a recognized department or subdivision of the enterprise; (3) customarily and regularly direct the work of at least two or more other full-time employees; and (4) have the authority to hire or fire other employees or have their opinion about such matters be given particular weight.

Even though he was paid a salary and had the purported title of “manager,” Mr. Sturtevant claims that he “did not have the power to hire or fire employees.”   Therefore, he claims that Ms. Dion “improperly and illegally designated him as an exempt employee ,” and that he should have been paid overtime for all the 8-20 hours he worked over 40 each week – including the “extensive tasks” he performed at Ms. Dion’s home each week.

While her heart might go on, let’s hope Ms. Dion’s failure to pay workers properly doesn’t.

Look here for more information about the overtime requirements of the FLSA and here to learn more about the exemptions from minimum wage and overtime.

The Worst Restaurants to Work For: Is your employer on the list?

This year, the Restaurant Opportunities Centers United (“ROC-United”), a national restaurant workers’ organization, published a handy “Diners’ Guide” that provides information on wages, benefits and workplace standards at some of the most popular restaurants in the United States.  The guide reveals what many servers, cooks, and dishwashers already know: restaurant workers regularly face poverty wages, unsafe working conditions, racial, ethnic, and gender discrimination, or work while sick on a regular basis.  Now the Diners’ Guide, and the reality that it brings to light, is getting some much deserved attention.  Although the guide was published much earlier this year, recent stories published in the popular internet press, and by no less a foodie than the New York Times’ Mark Bittman, have brought renewed attention to the guide. 

Restaurant industry workers are standing up for themselves in other ways, too.  Servers at restaurants like The Cheesecake Factory (named one of the worst employers in the guide and press) are suing their employers to recover lost wages for time they are required to work off the clock and for uniforms and tools that they are required to provide for themselves.

Hopefully discussions and actions like this will work to change things in the business.  Do your part to ensure that servers aren’t forced to work off the clock, pay for employer-required uniforms, and aren’t forced to work while sick.  Learn what your rights are as a tipped employee and take the guide with you when you go out to eat.

Jury Awards $2 Million Verdict to Meat Processing Facility Employees

     Yesterday (9/26/2011), a jury awarded workers from multiple Tyson Foods, Inc. (“Tyson”) meat processing facilities a $2,892,378.70 verdict for uncompensated work performed before and after their shifts.  The Plaintiffs consisted of production and support employees from the Denison, IA and Storm Lake, IA facilities.  The trial took place in the U.S. District Court for the Northern District of Iowa.

     Plaintiffs claimed that the donning and doffing of hard hats, work boots, hair nets, frocks, aprons, gloves, whites, and ear plugs before or after work constituted compensable “work” as defined by the Fair Labor Standards Act (“FLSA”).  Tyson argued that these were merely “preliminary” and “postliminary” activities, for which it did not have to compensate employees. 

     The jury agreed with the Plaintiffs, and found that the preliminary and postliminary activities were compensable work under the FLSA, and, therefore, Tyson had failed to properly compensate these employees for that work.

Nebraska Meat Processing Plant Employees Receive Settlement from Meat Company

On July 19th, a settlement between Cargill Meat Solutions Corp. and a number of employees from its Schuyler, Neb., beef processing plant was approved by Judge Richard G. Kopf of the U.S. District Court for the District of Nebraska.  The plant employees claimed in their complaint that Cargill had violated overtime and minimum wage requirements set by the Fair Labor Standards Act (“FLSA”), the Nebraska Wage and Hour Act (“NWHA”), and the Nebraska Wage Payment and Collection Act (“NWPCA”).  Specifically, the employees claimed that they were not paid for required activities performed before shifts, after shifts, and during meal breaks, such as: obtaining tools, equipment and supplies necessary for the performance of their jobs; donning, doffing, and sanitizing various equipment and protective gear; sharpening knives or using “steels” or “mousetraps;” sanitizing knives; and walking between work sites before the first work activity and after the last work activity of the day.  The performance of these activities led to the plant employees working substantial amounts of time “off-the-clock” and without pay.  According to the settlement agreement, the plant employees required to wear the most amount of protective equipment will receive $6.00 per week for a specific period of time already worked, while other employees will receive $4.00 per week. The approved settlement will help to compensate these employees for their previously uncompensated work time.

UPS may be Forced to Deliver Overtime Pay to Drivers

            Ernesto Carrera and Christopher Stephenson, sued UPS Supply Chain Solutions, Inc. (“SCS”), a subsidiary and sister company of UPS, for minimum wage and overtime violations under the Fair Labor Standards Act.  SCS is self-described as a logistics company that manages other companies’ supply chains, and as part of that, operates hundreds of distribution centers throughout the U.S. and around the world.

             The drivers worked in Fort Lauderdale and Miami as delivery drivers for SCS.  Delivery assignments were made by SCS from a list of drivers in the area.  When the driver’s name reached the top of the list they were offered the job, which they could refuse or accept.  Drivers usually accepted the jobs, because if they declined, their name went to the bottom of the list. 

             SCS classified the workers as “independent contractors” under a non-negotiable piece rate method of payment where drivers were paid either a lump sum within a specified area or a flat rate per mile outside the area.  Drivers were not paid for the time they spent waiting for assignments despite claims that they were required to wait around the warehouse and were prevented from being able to pursue work at other locations during the waiting time. The drivers claimed they were paid below the minimum wage and were denied overtime pay.  SCS contends that drivers are independent contractors, and as such, are not owed minimum wage and overtime premiums.

             The U.S. District Court for the Southern District of Florida allowed the case to proceed as a collective action, finding that a class of similarly situated drivers existed and that such class members may join the lawsuit. 

Supreme Court Grants Greater Protection against Retaliation for FLSA Complaints

 

        The Supreme Court of the United States issued a decision today that has provided workers with added protection from employers retaliating against employees who complain about violations of the Fair Labor Standards Act (“FLSA”).  The FLSA is the federal statute that establishes employment rules and regulations (i.e. minimum wage, overtime pay, etc.). The statute also has an anti-retaliation provision that prohibits an employer from terminating or discriminating against an employee that has “filed any complaint” alleging violations of the FLSA, testified or is going to testify, or served on an industry committee. In the suit of Kasten v. Saint-Gobain Performance Plastics Corp., Kasten alleged that Saint-Gobain violated this FLSA provision by terminating him for verbally complaining to company officials about not being compensated for time spent donning and doffing mandatory protective gear and walking to work areas between the timeclocks and the changing rooms. Before being granted certiorari by the Supreme Court, the Western District Court of Wisconsin first ruled that Saint-Gobain had violated the FLSA by failing to compensate its employees for time spent donning and doffing protective gear, but ruled unfavorably as to Kasten’s retaliation claim. The District Court concluded that only written complaints were covered under the FLSA’s anti-retaliation provision. On appeal, the Seventh Circuit also agreed with the District Court’s interpretation of the FLSA. However, upon review of the suit, the Supreme Court clarified that the FLSA anti-retaliation provision encompassed both written and oral complaints. The Supreme Court explained that, among other things, limiting the definition of “filing a complaint” to only written complaints completely undermines the purpose of the anti-retaliation provision, which is to forbid “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers,” 29 U.S.C. §202(a).

        This decision is a huge win for all FLSA covered employees and is another step in the right direction toward ensuring a better and more equal workplace.

Tyson Foods Workers Awarded Jury Verdict in FLSA Lawsuit

 

           A jury in the U.S. District Court for the District of Kansas awarded over $500,000 to a class of meatpacking plant employees on Thursday (3/17/11). The collective action lawsuit sought to recover earned wages and overtime pay for workers at a Tyson Foods, Inc. meat processing facility located in Finney County, Kansas. The workers alleged that they performed several duties throughout their shifts for which they were not paid, such as changing into the required protective work uniforms and safety equipment (work pants and shirts, hard hats, safety boots, hair nets, etc.), and substantial walks to and from the changing area, work areas, and break areas. In awarding a verdict in favor of the plaintiffs, the jury found that Tyson Foods, Inc. violated both the Fair Labor Standards Act (“FLSA”) and the Kansas Wage Payment Act (“KWPA) by failing to compensate their Finney County employees for all hours worked.

            Owners of these types of facilities have historically been the subjects of litigation under the FLSA and state wage acts when they engage in miserly pay practices, such as trying to save money by not compensating employees for time spent donning and doffing protective gear and the subsequent walks to their workstations. Generally, if an employee performs a task that is primarily for the benefit of the employer, then the employee must be compensated for that time. Also, under the “continuous workday rule”, once an employee has engaged in such a principal activity, the employee’s workday has begun. Therefore, if the donning and doffing of protective gear is substantial enough and considered a principal activity primarily for the benefit of the employer, the workday has begun and the employee’s subsequent walk to their workstation should be considered compensable work time.

Class Action for DirecTV Installers Proceeds

The U.S. District Court for the District of Minnesota allowed workers who install and maintain DirecTV satellite systems to proceed as a class.  The lawsuit for unpaid wages under the Fair Labor Standards Act was brought by Carlton Edwards and others against Multiband Corporation, one of DirecTV’s largest full-service home service providers (HSP’s). Multiband is responsible for 20% of the installation and maintenance of DirecTV’s satellite equipment for single-family homes throughout the nation, operating in 16 states. It claimed that the workers were really employees or independent contractors of other companies with whom Multiband subcontracted.  The court found that Multiband directly controlled the work done by the technicians, including requiring them to start a job at a certain time, clock-in with a Multiband dispatcher, perform the job within a certain time frame, pass inspections by Multiband for the work done, and attend Multiband classes to stay current with Multiband policies and procedures.  Other DirecTV HSP’s have been sued for similar pay practices.