Outten & Golden: Empowering Employees in the Workplace

Workers Sue Walmart For Manipulating Employee Classification To Deny Them Overtime Pay

April 10th, 2015 | Bryce Covert

Bryce CovertWalmart is facing a potential class action lawsuit over alleged wage theft in Alameda County Superior Court from an employee who claims the company illegally denied managers overtime pay.

Bonnie Cardoza, who worked at the company as an assistant manager for about five years, says she and other assistant mangers were made to do the same tasks as hourly workers for more than eight hours a day. The extra duties included greeting customers, operating checkout areas, and taking inventory.

But because they are labeled managers, they are exempt from federal overtime laws that require employers to pay workers time and a half for more than 40 hours of work a week. The lawsuit alleges that they “were ‘managers’ in name only because they did not have the managerial duties or authority,” but that Walmart purposefully classified them as managers to avoid overtime pay and cut costs. The suit claims they should have been paid that extra wage for more than eight hours of work a day.

The lawsuit also says the company deprived Cardoza and other assistant managers of rest and meal breaks.

She is suing for back wages to make up for the lack of overtime pay and compensation for the missed breaks on behalf of any Walmart assistant manager who has worked there since January 2011, although her lawyers say it’s too early to know whether it will achieve class action status.

In response, a Walmart spokesperson said, “It is our policy to pay associates according to federal and state laws. We take this matter seriously. We are investigating the allegations and will respond appropriately with the court.”

It’s not the first time the company has been accused of denying its workers pay. At the end of last year, the company was ordered by the Pennsylvania Supreme Court to pay $151 million in back wages to 187,000 current and former employees who accused it of making them work off the clock during their breaks.

A big Walmart supplier also had to pay out over wage theft in 2013 over allegations that it forced workers to forgo meal breaks. While Walmart doesn’t own the operations, it effectively runs facilities for the company and the company has been accused of squeezing its suppliers so hard that they have to crack down on labor costs.

Wage theft is rampant beyond Walmart, however. In 2012, nearly $1 billion was recovered in back wages for the victims of wage theft, but even that undercounts the breadth of the problem since most workers don’t report the problem. It’s estimated that employers deny workers $50 billion that they’re owed every year by making them work off the clock, shave hours off of their paychecks, pay for work-related expenses out of their own paychecks, or other practices that dock wages. That figure dwarfs the $14 billion taken from all victims of robberies, burglaries, larcenies, and car thefts together.

The problem is particularly rampant in fast food, where recent suits have been filed against TGI Friday’s, McDonald’s, Subway, and Chipotle.

The issue of overtime misclassification has also gotten attention recently. Last year, President Obama issued an executive order that would update overtime laws so that fewer employees could be classified as managers and therefore exempted from time and a half. It would also raise the salary cutoff for getting overtime pay, which currently means anyone who makes more than $23,660 is exempt, a threshold that hasn’t been significantly updated since 1975. These changes could also aid employees like Cardoza, who would likely qualify for overtime pay even if they are assistant managers.

This article originally appeared in thinkprogress.org on April 10, 2015. Reprinted with permission.

About the Author: Bryce Covert is the Economic Policy Editor for ThinkProgress. She was previously editor of the Roosevelt Institute’s Next New Deal blog and a senior communications officer. She is also a contributor for The Nation and was previously a contributor for ForbesWoman. Her writing has appeared on The New York Times, The New York Daily News, The Nation, The Atlantic, The American Prospect, and others. She is also a board member of WAM!NYC, the New York Chapter of Women, Action & the Media.

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