Menu Bar

Home           Calendar           Topics          Just Charlestown          About Us

Friday, September 8, 2023

The Other Wage Theft

Being called a "manager" doesn't make up for paying less

By Philip Mattera, director of the Corporate Research Project in the Dirt Diggers Digest


When we hear references to wage theft, there is a tendency to think of low-paid workers being cheated by fly-by-night employers. That is only part of the story.

Wage and hour violations affecting better-paid white-collar workers are also common, and the employers involved are often household names. Their abuses typically consist of practices such as denying overtime pay to low-level supervisors by erroneously classifying them as managers.

The federal law governing workplace pay practices, the Fair Labor Standards Act, provides exemptions for bona fide executive, administrative and professional employees, who are typically paid a salary. Yet in order for the exemption to apply, the person must be paid above a certain level.

Unfortunately, that threshold has not been adequately updated and is today only $35,000 annually. As a result, many first-line supervisors and similar employees with quite modest salaries end up working many extra hours without additional compensation.

A new proposal from the U.S. Labor Department would alleviate the situation by raising the threshold to about $55,000 a year. Yet this would not completely solve the problem.

Some employers will flout the new standard the way they did with the old one. In fact, the higher threshold will probably tempt even more companies to cheat. Along with the new threshold, the Labor Department needs to put more emphasis on enforcement, especially at larger corporations.

In 2018 I wrote a report called Grand Theft Paycheck that analyzed the prevalence of wage theft in big business by looking both at DOL enforcement actions and private collective action lawsuits brought on behalf of groups of workers. The latter accounted for most of the penalties collected from large corporations.

During the past five years I have continued to document wage theft cases for Violation Tracker, and the trend continues. Here are some of the significant settlements since 2018 involving white-collar and professional workers:

Humana agreed to pay $11 million to settle allegations that it improperly treated nurses as exempt from overtime.

Wells Fargo agreed to pay over $10 million to settle allegations that it failed to pay home mortgage consultants proper commissions and incentive payments.

CVS Health agreed to pay over $10 million to resolve a lawsuit alleging it did not properly compensate pharmacists for time spent on company-mandated training.

Computer Sciences Corporation agreed to pay over $9 million for failing to pay overtime to system administrators.

Pharmaceutical company Baxalta agreed to pay over $4 million for failing to pay overtime to technicians.

Santander Bank agreed to pay over $4 million to settle litigation alleging it did not pay proper overtime compensation to branch operations managers.

Facebook agreed to pay $1.65 million to resolve a lawsuit claiming it improperly classified its client solutions managers as exempt from overtime pay.

All these cases were brought by plaintiffs’ lawyers, who provide an important service (while collecting a portion of the proceeds). It would be preferable, however, to see the Labor Department pursue more of these cases as well as the ones involving small businesses.

Wage theft comes in multiple forms. Regulators should be investigating them all.