Employees who are not exempt from overtime rules are entitled to a greater pay rate for any hours they work over forty in a week. Federal and New Jersey employment laws protect this right and impose penalties and legal liability on employers who fail to pay overtime rates to their employees. Under the federal Fair Labor Standards Act (FLSA), an employer may be liable to employees for double the amount of unpaid overtime. The statute allows an employee to bring a lawsuit on behalf of themselves and other employees in similar circumstances. A group of retail employees recently settled a lawsuit that alleged overtime violations under the FLSA and state law. As part of the settlement, the defendant agreed to pay $1.25 million in damages.
The FLSA requires employers to pay time-and-a-half to non-exempt employees for overtime work. Generally speaking, overtime hours begin once an employee has worked forty hours. The statute uses the term “workweek,” but does not provide a definition. Employers may vary on how they define the term, although a workweek must consist of seven days. A workweek typically goes from Monday to Sunday or Sunday to Saturday. If an employee works forty-five hours during the period that the employer considers a workweek, the employer must pay them the overtime rate for five hours.
Section 16(b) of the FLSA allows employees to bring collective actions for “other employees similarly situated.” A collective action under the FLSA is similar to a class action in many ways. It allows multiple employees with similar claims to pool their claims, which can make asserting their rights more efficient. One important difference is that FLSA collective actions are strictly “opt-in.” Some class actions automatically include all parties who meet the criteria for the class unless they opt out of class membership. For an FLSA collective action, potential plaintiffs must give written consent to be part of the lawsuit.
The lead plaintiff in the lawsuit described above was an hourly worker for the defendant for just over a year, from 2018 to 2019. According to the lawsuit, the defendant has been the subject of multiple legal complaints alleging failure to pay the correct overtime amount. The plaintiff alleged that the defendant knew that their pay policies violated the FLSA in 2018, but that the “illegal pay scheme” continued at least until the following year.
The main issue in the FLSA overtime claim was the defendant’s alleged failure to include earned commissions in its calculation of overtime pay. FLSA regulations require employers to include earned commissions in an employee’s regular rate when calculating their overtime pay. Commissions count as “payments for hours worked” under the FLSA, so they must be included.
The plaintiff filed suit against the defendant in May 2020, alleging violations of the FLSA’s overtime provisions. The trial court certified the case as an FLSA collective action a year later. People who worked for the defendant during specific periods between 2017 and 2020 were eligible to join the suit. A total of 479 people joined. Mediation occurred in March 2024.
The parties announced a settlement in May. The agreement provides a $25,000 service award for the named plaintiff. After fees and expenses, about $800,000 will be available for distribution to the plaintiffs.
The skilled and knowledgeable employment attorneys at the Resnick Law Group represent New Jersey and New York employees who have endured unlawful practices in the workplace. To schedule a confidential consultation to see how we can assist you, please contact us today online, at 973-781-1204, or at 646-867-7997.