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.