Does your organization have top-down policies that tacitly create incentives for hourly employees to work extra hours without pay? If so, you may be risking a class-action wage-and-hour lawsuit. That’s what happened to one large employer when a disgruntled hourly employee claimed the company practically forced him to work extra hours in order to keep his job.
Recent case: Willie Lopez claimed he worked off the clock at a Lowe’s home improvement store because he couldn’t get everything done that he was ordered to do within a normal workday. He sued, alleging violation of the California Labor Code wage-and-hour provisions—plus he asked for class-action status. His attorneys wanted to sue on behalf of 25,000 other hourly employees.
To make his case, Lopez presented testimony that Lowe’s managers got bonuses for meeting or beating their labor-cost targets. Lopez also said he had been threatened with losing his job if he didn’t accomplish everything his managers required during a shift. He told the court it was impossible to meet those demands without working extra—and unpaid—hours.
The Court of Appeal of California agreed with Lopez and ordered the case to go forward as a class action. Because Lowe’shad an incentive to limit overtime as much as possible, Lowe’s should have known that working off the clock was a possibility. That was enough to justify a single trial on behalf of all employees who may have worked extra hours without pay. (Parris, et al., v. Lowe’s, No. B191057, Court of Appeal of California, Second Appellate Division, 2007)
Advice: Watch out if you offer managers bonuses for beating payroll targets, have policies that prohibit overtime or insist on goals that cannot reasonably be met during an ordinary workday. Make sure employees aren’t working hours they’re not reporting. You must pay for all hours worked whether or not you authorized those hours.
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