Retail Worker Exploitation

Retail workers seem to be exploited more and more these days. Various retailers, such as Walmart, Home Depot and Lowes have been sued all around the country for the same types of issues – wage and hour violations. While there does not appear to be any large judgments against these types of companies, employees are collecting back wages through settlements at a record pace. Let’s take the above-mentioned employers out of the picture, and ask the question, “Why are retail employees being taken advantage of on a daily basis, especially since their wages are so modest to begin with?”

Simple economics shows that there is a high demand for employment, and workers are plentiful. This makes it harder for abused workers to speak up about their pay discrepancies. They fear that if one mistake is made, their jobs will go to the next applicant in line. And why wouldn’t they feel this way? Workers are out there just trying to support themselves and their families. If they complain about not receiving their owed wages, the monopolistic companies will send them away with a pink slip and no supper.

Today, most families in America are less than one paycheck away from going broke. Not paying their rents. Not paying their mortgages. Not able to buy groceries. Sadly, many of these cut-throat retailers don’t care.

They don’t care how you pay for food, medical or housing. They only care about their bottom lines. By coercing you into working one hour off the clock, instead of spending that time with your family, or God forbid pay you, they add an extra $11 to their bottom line. But, that extra hour is supposedly your tax for keeping your job. I thought that type of abuse was taken care of after the Great Depression, when this country decided that working standards were a necessary part of human rights?

Employee Availability After Hours Comes at a Price

The Wall Street Journal reports on a potential boom in lawsuits relating to unpaid overtime. The culprit--company issued smart phones combined with lean workforces requiring fewer employees who handle more responsibility. With new technology, employees are capable, and often expected, to handle work related communication anytime and anywhere, whether they are off the clock, sick, or on vacation. The article reports on two recently filed lawsuits claiming unpaid overtime under the Fair Labor Standards Act (FLSA) . In one case, retail employees of T-Mobile USA claim they were required to use company issued smart phones to respond to messages and customer complaints after hours. In the second case, a maintenance employee for CB Richard Ellis alleges he was not paid for after hours time spent sending and receiving messages on his cell phone.

Under the FLSA, whether an employee is who is required to carry an employer issued mobile phone, pager, or smart phone after hours remains on the clock depends upon many factors, including the nature of the job and how frequently the employee actually has to use the device for work related purposes. Depending upon the number of employees involved, failure to comply with FLSA's overtime requirements can result in substantial financial liability. To avoid running afoul of these overtime requirements, prudent employers are urged to develop clear practices concerning employee's use of company issued technology.

Company Officers May Be Held Personally Liable for Unpaid Wages

A bankrupt company does not necessarily relieve corporate officers of liability for unpaid wages under FLSA. So held the U.S. Court of Appeals for the Ninth Circuit in Boucher v. Shaw, decided on July 27, 2009. In Boucher, a group of former employees of the bankrupt Castaways Hotel, Casino, and Bowling Center in Las Vegas sued the CEO, Chief Financial Officer, and manager in charge of labor relations, claiming the individual officers and managers were liable for their unpaid wages. Rather than getting in line with other creditors in the bankruptcy proceedings, the plaintiffs decided to pursue the officers individually.

The Court noted that the definition of "employer" under FLSA is not limited by the common law understanding of the term, but "is to be given an expansive interpretation in order to effect FLSA's broad remedial purposes". The test, according to the Court, is whether the individual exercises "control over the nature and structure of the employment relationship", or "economic control" over the relationship. In this case, the Court noted that the CEO held 70% of the company shares, the manager in charge of labor relations owned 30%, and the CFO had responsibility for cash management. Under these facts, the Court held the plaintiff's stated a claim against the individuals under FLSA. The Court rejected the defendants' argument that any claims for unpaid wages by former employees belonged in the bankruptcy court.

While there is no similar precedent in the Eighth Circuit, the Boucher case nonetheless should put company officials on notice that wage claims may exist against them individually, even after the corporation is bankrupt or otherwise defunct.

Article by Iowa Employment Law Blog