The Other Wage Theft

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.

Reducing Exploitation in the Gig Economy

On October 10 the San Diego City Attorney announced that the grocery delivery service Instacart had agreed to pay $46.5 million to settle a lawsuit alleging that it violated California’s labor code by misclassifying some 308,000 of its workers over a five-year period.

The following day, the U.S. Department of Labor announced a proposed new rule for determining when gig workers should be classified as employees rather than independent contractors.

These events represent two fronts in the widening war between regulators seeking to bring traditional workplace protections to the gig economy and companies such as Instacart that have come to rely on low-cost flexible labor.

In the middle are the workers themselves, who do not line up neatly on either side. Some of those doing gig work value flexibility over things such as overtime pay and may view the DOL proposal and the stricter rules adopted by states such as California as threats to their livelihood.

Yet there are also large numbers of people toiling for the likes of Instacart and Uber who struggle to make a decent living and feel exploited. Many of them would welcome the benefits that come with employee status, even if it means more rigidity in their working arrangement.

The proposed DOL rule seeks to better identify who belongs in which category by replacing the narrow criteria adopted during the Trump Administration with a multi-factor test that it takes the department 184 pages to detail. For example, the DOL would look at whether the worker had the ability to set prices for the services provided.

These additional tests would likely make it more difficult for companies to classify workers as independent contractors. Yet even if the new rule is implemented in some form, the gig giants will resist changing their ways. In all likelihood, they will go on treating workers as independent contractors and wait to be challenged. That’s the approach they have taken under current law

As shown in Violation Tracker, four of the largest ride-sharing and delivery services have together paid over $88 million in class-action wage and hour lawsuits. Uber leads the pack with $49 million in such settlements, followed by Lyft with $28 million. Instacart and DoorDash have each paid about $5 million.

That is on top of what they have paid to state and local agencies in misclassification cases such as the one brought in San Diego. Uber, for example, recently paid $100 million to New Jersey.

If the rules are changed, these settlements will become even larger and more frequent. The gig companies will go on paying them in the hope of staving off something they see as much worse.

Once gig workers become employees, it will be a lot easier for them to seek the additional protections that come with collective bargaining. Employee status is an important stepping stone to unionization, which would mean an end to the worst forms of exploitation.

It is possible to imagine an economy that combines labor flexibility with strong worker protections, but it would require the gig employers to cede some of the one-sided control they now exercise.

Called to Account for Wage Theft

New data from the Bureau of Labor Statistics on job-hopping and on wage increases continue to illustrate a remarkable rise in worker assertiveness. The pandemic has finally allowed those who have been suffering for years from wage stagnation to turn the tables on employers. What business groups describe as a labor market crisis is in fact the beginning of liberation for the low-wage workforce.

These workers are reacting not only to inadequate compensation and oppressive schedules. They are also fed up with the additional indignity of being cheated out of the pay they are supposed to receive. The Great Resignation can also be seen in part as a response to the epidemic of wage theft that has afflicted the U.S. labor market.

This was brought home to me again in the course of updating the data in Violation Tracker. There continues to be a steady stream of announcements of cases involving the failure to provide proper overtime pay, the failure to provide required paid breaks and the numerous other ways employers take money out of the pockets of workers.

The cases we document come from either private litigation or regulatory actions. The larger settlements involve collective action lawsuits brought by plaintiff law firms on behalf of groups of workers. Here are some examples that were finalized in just the past few months:

  • Chipotle agreed to pay $15 million to resolve allegations that it denied overtime pay to management trainees.
  • Humana paid more than $11 million to settle allegations that it denied overtime to nurses by improperly classifying them as exempt employees.
  • T-Mobile agreed to pay $2 million to resolve a lawsuit alleging that it forced customer service representatives to do off-the-clock work.
  • The discount grocery chain Aldi paid $2 million to thousands of California employees who said they were cheated out of overtime pay.

Wage theft is, of course, also investigated by the Wage and Hour Division of the U.S. Labor Department. Many of the cases handled by WHD involve small firms, but it also takes on bigger employers and sometimes collects substantial amounts of back pay and penalties. Among the recent examples of these larger actions are the following:

In October, a federal court in Pittsburgh entered a consent judgment in which an oilfield services company admitted liability for more than $40 million in back wages and damages after a WHD investigation found Fair Labor Standards Act violations affecting 700 workers. The company, Holland Services, has filed for bankruptcy.

In November, a federal court in San Francisco ordered telemarketing firm Wellfleet Communications to pay more than $1.4 million in back wages and liquidated damages to more than 1,300 call center workers found by a WHD investigation to have been improperly classified as independent contractors.

There has also been an increasing focus on wage theft by state and local prosecutors. For example, the New York Attorney General, in partnership with the New York City Department of Consumer and Worker Protection, recently announced an agreement with two major home care health agencies to deliver up to $18.8 million in unpaid wages to approximately 12,000 workers who had been denied fair pay for years.

The San Francisco City Attorney announced a $5 million settlement with DoorDash to resolve allegations that it misclassified its delivery drivers as independent contractors to avoid providing required sick leave and that it improperly used tip income to cover their base pay.

Some businesses are paying a price in fines and settlements while others are now having to offer higher wages. One way or another, they are being called to account for years of labor exploitation.

Note: all these cases will be included in the Violation Tracker updated that will be posted later this month.

Striking Back

The media these days is full of what amounts to employer propaganda. The setbacks in the organizing drives at Amazon are called signs that unions are obsolete. The difficulties that low-wage companies are having in refilling positions are presented as justification for terminating enhanced unemployment compensation. The long-overdue upward movement in wages is depicted as part of a dangerous trend toward inflation.

The Washington Post has just bucked this trend by publishing an account of a labor conflict in Kansas that reminds us that certain unpleasant realities persist in the workplace and that some old-fashioned ways of responding to them are still suitable.

Hundreds of workers at a Frito-Lay snack food plant in Topeka went on strike earlier this month to protest work schedules that sound like something out of the 19th Century. Many of the employees were being forced to work seven days a week and up to 12 hours per shift, creating workweeks that could reach 84 hours.  

The reason for this is that demand for Cheetos and Doritos has been robust, and Frito-Lay wants to make the most of it. Fortunately, the workers are represented by the Bakery union (BCTGM), so they are not completely at the mercy of management. Yet the company is said to have rebuffed calls from the union to hire more workers and is taking a hard line in contract renewal negotiations.

Frito-Lay’s retrograde management style started long before the current dispute. The company, a division of the soft drink giant PepsiCo, has a record of workplace abuses dating back at least two decades. This can be seen in Violation Tracker, which documents 29 cases since 2000.

These include seven cases in which Frito-Lay had to provide back-pay to workers to settle unfair labor practice charges as well as 13 cases in which it was penalized by OSHA for health and safety violations.

But perhaps what is most remarkable about Frito-Lay is that it has been sued repeatedly for wage and hour abuses and has paid out more than $23 million to settle five different collective action lawsuits. The largest of these was an $11.9 million settlement back in 2001 involving driver-salespersons. In 2018 the company paid $6.5 million to settle allegations that it did not provide proper pay to long-haul drivers, including a failure to comply with California law concerning meal and rest breaks.

Frito-Lay’s workplace practices are in keeping with those of its parent. PepsiCo has paid millions more to settle similar lawsuits relating to its Pepsi operations. These include a $5 million settlement in 2018 and a $3 million settlement in 2015. It has also paid fines to the U.S. Labor Department for Fair Labor Standards Act violations.

While some of the circumstances of the Kansas strike stem from the current economy, at its core is the age-old struggle by workers to be treated fairly. Let’s hope that the time-honored tactic of withholding labor is sufficient to get Frito-Lay to do the right thing.

The Corporate Marauder Undermining the Postal Service

Donald Trump got elected in part by selling the idea that his business experience would enable him to do a great job of running the government. We see how that turned out. And now we have another veteran of the private sector wreaking havoc on the United States Postal Service.

Louis DeJoy was named postmaster general after spending four decades in the trucking and logistics business, becoming wealthy enough in the process to join the ranks of Republican megadonors. He made his name and his fortune through the creation of a company called New Breed Logistics, which grew to prominence by securing contracts with large corporations such as Boeing as well as the Postal Service.

In 2014 he sold New Breed to the Fortune 500 company XPO Logistics, staying on to run the New Breed operation and serve as a director of XPO until 2018. If we want to get a sense of the management approach DeJoy is bringing to the USPS, we can look at the track record of New Breed and XPO.

As shown in Violation Tracker, XPO and its subsidiaries have racked up a total of $65 million in fines and settlements in more than 70 misconduct cases over the past two decades. Nearly two-thirds of that total comes from wage theft. Last year XPO paid $16.5 million to resolve allegations that for years it misclassified drivers as independent contractors to deny them overtime pay and paid breaks.

This year XPO paid another $5.5 million for wage and hour violations relating to workers at its Last Mile operations. Altogether, XPO and its subsidiaries have had to pay out some $40 million in wage theft lawsuits. Another $3.5 million settlement in a misclassification case brought against an XPO unit and the retailer Macy’s is awaiting final court approval.

Another problem area for XPO is employment discrimination. Two of the cases in this category relate to New Breed Logistics. In 2015 a federal appeals court upheld a $1.5 million jury verdict in a sexual harassment and retaliation case originally filed by the Equal Employment Opportunity Commission in 2010. Also in 2015, New Breed had to pay $90,000 to resolve allegations by the Office of Federal Contract Compliance Programs that it engaged in discriminatory practices at a facility in Texas.

XPO has also been called out for workplace safety and health deficiencies. It has been cited more than 20 times by OSHA for serious, willful and repeated violations.

Along with the mistreatment of workers, the rap sheet of XPO and its businesses includes allegations of cheating the federal government. This comes by way of Emery Worldwide, an air freight company that became part of Con-Way Inc., which was purchased by XPO in 2015.

In 2006 Emery paid $10 million to settle a False Claims Act lawsuit brought by the Justice Department concerning the submission of inflated bills to the Postal Service for the handling of Priority Mail at mail processing facilities during a multi-year contract.

Leave it to the Trump Administration to choose someone to head the Postal Service who was associated with a company linked to fraud committed against that same agency.

XPO continues to do business with the Postal Service, and DeJoy has continued to receive income from the company through leasing agreements at buildings he owns. Even if XPO had a spotless record, DeJoy’s ongoing dealings with it create a glaring conflict of interest.

DeJoy claims to be retreating, at least through the election, from the measures that threatened to create chaos for mail-in ballots.  Nonetheless, his corporate marauder’s approach to the management of the Postal Service still poses a grave threat to the future of a vital American institution.

The Paycheck Protection Program and Wage Theft

The Trump Administration’s reluctant disclosure of the names of more than 600,000 recipients of Paycheck Protection Program aid has shown that many of the loans went to firms that are well-connected and that otherwise don’t fit the image of mom-and-pop businesses we were led to believe would be the main beneficiaries.

There is another problem: many of the recipients previously engaged in behavior that amounts to paycheck endangerment. They failed to comply with minimum wage and/or overtime requirements and thus paid their workers less than what they were owed. In other words, they engaged in wage theft.

This comes from an analysis of data my colleagues and I have collected for the Covid Stimulus Watch and Violation Tracker databases. That includes the big PPP dataset and information on penalties imposed by the Labor Department’s Wage and Hour Division, one of the many agencies whose enforcement data can be found in Violation Tracker.

We are in the process of determining which PPP recipients are on the list of wage and hour violators, so we can highlight that in Covid Stimulus Watch along with other corporate accountability data.

As a first step, I looked at the 4,800 companies identified as receiving the largest PPP loans–$5 million to $10 million. So far, I have found 88 of those recipients that paid wage theft penalties since 2010. Their penalties averaged about $100,000—which is roughly double the amount paid in back pay and fines in a typical wage and hour case.

The largest wage theft penalty I’ve found for a PPP recipient is the $1.9 million paid by Hutco Inc., a marine and shipyard staffing agency based in Louisiana. In announcing the penalty, the U.S. Department of Labor said the company had utilized improper pay and record-keeping practices, resulting in “systemic overtime violations” affecting more than 2,000 workers.

PPP recipient National Food Corporation, a major egg producer, paid $435,000 in penalties for wage and hour violations at its operations in Washington State. The company also paid $650,000 to settle a sexual harassment lawsuit filed by the Equal Employment Opportunity Commission.

Hearth Management, a PPP recipient that manages assisted living facilities in four states, paid a total of $383,000 in wage theft penalties at several locations. At a facility in Tennessee, the Labor Department reported that the company made deductions from timecards for meal breaks even when employees worked through those breaks, and it failed to include on-call and other non-discretionary supplements when calculating overtime rates.

Other PPP recipients with substantial wage theft penalties include the publisher O’Reilly Media, the electronics company Sierra Circuits, the restaurant chain Legal Sea Foods, and Erie County Medical Center in Buffalo, New York, which has also been penalized for overbilling Medicaid.  Apart from the PPP money, the Erie County Medical Center has received more than $75 million in grants and loans from other federal programs related to covid relief.

We will undoubtedly find many more companies with similar track records as we analyze the other hundreds of thousands of PPP recipients.

It was not illegal for employers with a history of wage theft penalties to apply for and receive PPP assistance, yet the presence of these companies in the recipient list points to dual risks.

First, there is the possibility that these firms will “cook the books” when it comes to reporting on their use of PPP funds and submitting their requests to have the loans forgiven. Second, these firms may feel that the current economic crisis will give them cover for returning to their old practices of wage theft. At a time of massive unemployment, these firms may assume that workers will not dare to complain about being shortchanged on their pay.

For these reasons, PPP employers with a history of wage theft penalties should be subject to additional scrutiny both by the Wage and Hour Division and the Small Business Administration. Paycheck protection must mean not only the preservation of jobs but also the defense of fair labor standards.

Bloomberg’s Wage Theft Problem

Michael Bloomberg was pummeled during the Democratic debate in Las Vegas over the treatment of women at his media and data company. Yet that is not the only blemish on the employment record of Bloomberg L.P. The company also has a serious problem with wage theft.

Violation Tracker lists a total of $70 million in penalties paid by Bloomberg for wage and hour violations, putting it in 32nd place among large corporations. Yet many of the companies higher on the list – such as Walmart, FedEx, and United Parcel Service – employ far more people than the roughly 20,000 at Bloomberg.

The bulk of Bloomberg’s penalty total comes from a 2018 collective action lawsuit in which it agreed to pay $54.5 million to resolve allegations that the company violated the federal Fair Labor Standards Act and state law in New York and California by failing to pay overtime to employees responsible for assisting customers using the proprietary software on Bloomberg financial data terminals.

The 2014 complaint in the case alleged that the employees were required to be at their desks before their shifts began, were required to use parts of their lunch hour to finish requests, and were required to work past the end of their shifts to finish jobs – all of which could cause them to work more than the 40 hours for which they were paid. Yet they received no additional compensation for the extra time, which the complaint said should have been paid at time-and-a-half.

For the next few years, Bloomberg’s lawyers fought the case both on substantive and procedural grounds, but they lost in their effort to prevent the certification of a class by the court. Whereas most employers who experience that setback agree to settle, Bloomberg wanted its day in court. The trial finally began in April 2018. After about a week of proceedings, the company apparently did not like the way things were going and entered settlement talks with the plaintiffs. A deal soon followed.

What makes the company’s aggressive posture in this case surprising is that it had previously settled four other wage and hour lawsuits for amounts ranging from $346,000 to $5.5 million.

Bloomberg’s wage theft litigation troubles expanded after the company had been cited twice for wage and hour violations by the U.S. Labor Department, paying a fine of $522,683 in 2011 and $547,683 in 2013.

In addition to all these cases, Bloomberg recently agreed to pay $3 million to settle another overtime lawsuit involving call center workers (the case is not yet in Violation Tracker).

Bloomberg is not the only tech company to have run afoul of the Fair Labor Standards Act. Google’s parent Alphabet, Intel, Apple, Adobe Systems, Microsoft, and Oracle are also high on the list of those companies that have paid the most in wage theft settlements and fines.

Yet Bloomberg LP is the only one on the list whose founder, majority owner and CEO is seeking to be the presidential nominee of a political party deeply concerned about the treatment of workers.

The 2019 Corporate Rap Sheet

While the news has lately focused on political high crimes and misdemeanors, 2019 has also seen plenty of corporate crimes and violations. Continuing the pattern of the past few years, diligent prosecutors and career agency officials have pursued their mission to combat business misconduct even as the Trump Administration tries to erode the regulatory system. The following is a selection of significant cases resolved during the year.

Online Privacy Violations: Facebook agreed to pay $5 billion and to modify its corporate governance to resolve a Federal Trade Commission case alleging that the company violated a 2012 FTC order by deceiving users about their ability to control the privacy of their personal information.

Opioid Marketing Abuses: The British company Reckitt Benckiser agreed to pay more than $1.3 billion to resolve criminal and civil allegations that it engaged in an illicit scheme to increase prescriptions for an opioid addiction treatment called Suboxone.

Wildfire Complicity: Pacific Gas & Electric reached a $1 billion settlement with a group of localities in California to resolve a lawsuit concerning the company’s responsibility for damage caused by major wildfires in 2015, 2017 and 2018. PG&E later agreed to a related $1.7 billion settlement with state regulators.

International Economic Sanctions: Britain’s Standard Chartered Bank agreed to pay a total of more than $900 million in settlements with the U.S. Justice Department, the Treasury Department, the Federal Reserve, the New York Department of Financial Services and the Manhattan District Attorney’s Office concerning alleged violations of economic sanctions in its dealing with Iranian entities.

Emissions Cheating: Fiat Chrysler agreed to pay a civil penalty of $305 million and spend around $200 million more on recalls and repairs to resolve allegations that it installed software on more than 100,000 vehicles to facilitate cheating on emissions control testing.

Foreign Bribery: Walmart agreed to pay $137 million to the Justice Department and $144 million to the Securities and Exchange Commission to resolve alleged violations of the Foreign Corrupt Practices Act in Brazil, China, India and Mexico.

False Claims Act Violations: Walgreens agreed to pay the federal government and the states $269 million to resolve allegations that it improperly billed Medicare, Medicaid, and other federal healthcare programs for hundreds of thousands of insulin pens it knowingly dispensed to program beneficiaries who did not need them.

Price-fixing: StarKist Co. was sentenced to pay a criminal fine of $100 million, the statutory maximum, for its role in a conspiracy to fix prices for canned tuna sold in the United States.  StarKist was also sentenced to a 13-month term of probation.

Employment Discrimination: Google’s parent company Alphabet agreed to pay $11 million to settle a class action lawsuit alleging that it engaged in age discrimination in its hiring process.

Investor Protection Violation: State Street Bank and Trust Company agreed to pay over $88 million to the SEC to settle allegations of overcharging mutual funds and other registered investment company clients for expenses related to the firm’s custody of client assets.

Illegal Kickbacks: Mallinckrodt agreed to pay $15 million to resolve claims that Questcor Pharmaceuticals, which it acquired, paid illegal kickbacks to doctors, in the form of lavish dinners and entertainment, to induce them to write prescriptions for the company’s drug H.P. Acthar Gel.

Worker Misclassification: Uber Technologies agreed to pay $20 million to settle a lawsuit alleging that it misclassified drivers as independent contractors to avoid complying with labor protection standards.

Accounting Fraud: KPMG agreed to pay $50 million to the SEC to settle allegations of altering past audit work after receiving stolen information about inspections of the firm that would be conducted by the Public Company Accounting Oversight Board.  The SEC also found that numerous KPMG audit professionals cheated on internal training exams by improperly sharing answers and manipulating test results.

Trade Violations: A subsidiary of Univar Inc. agreed to pay the United States $62 million to settle allegations that it violated customs regulations when it imported saccharin that was manufactured in China and transshipped through Taiwan to evade a 329 percent antidumping duty.

Consumer Protection Violation: As part of the settlement of allegations that it engaged in unfair and deceptive practices in connection with a 2017 data breach, Equifax agreed to provide $425 million in consumer relief and pay a $100 million civil penalty to the Consumer Financial Protection Bureau. It also paid $175 million to the states.

Ocean Dumping: Princess Cruise Lines and its parent Carnival Cruises were ordered to pay a $20 million criminal penalty after admitting to violating the terms of their probation in connection with a previous case relating to illegal ocean dumping of oil-contaminated waste.

Additional details on these cases can be found in Violation Tracker, which now contains 397,000 civil and criminal cases with total penalties of $604 billion.

Note: I have just completed a thorough update of the Dirt Diggers Digest Guide to Strategic Corporate Research. I’ve added dozens of new sources (and fixed many outdated links) in all four of the guide’s parts: Key Sources of Company Information; Exploring A Company’s Essential Relationships; Analyzing A Company’s Accountability Record; and Industry-Specific Sources.

Being Mindful of Paycheck Abuses

It turns out that yoga instructors are mindful about more than poses and breathing. They also make sure they are paid properly for their work. A group of instructors in Illinois who sued CorePower Yoga for violating federal labor law recently reached a final settlement of $1.5 million to resolve allegations that the chain failed to pay them for mandatory out-of-studio work such as class preparation and communicating with students.

The yoga instructors’ case is just one of a remarkable series of settlements that continue to emerge from the courts despite the efforts by employers to thwart collective action against workplace abuses. I keep an eye on these developments as part of my work on Violation Tracker and am amazed at the quantity and variety of wage theft litigation. Here are some other examples I have been collecting to include in the next update of the database.

PetSmart agreed to pay $2.4 million to a group of dog groomers in California who alleged they were shortchanged on overtime and mandatory rest breaks and meal periods.

Zocdoc, an online medical appointment booking service, agreed to pay $1.4 million to resolve a lawsuit filed in New York alleging that the company mistakenly classified sales personnel as exempt from overtime pay.

Safelite agreed to pay $8.2 million to windshield replacement technicians in California who claimed they were not properly paid for administrative duties and time spent traveling to jobs.

Great American Financial Resources agreed to pay $1.25 million in Ohio to settle a dispute involving commissions for insurance agents.

Here are some other cases in which the parties have reached a settlement that is awaiting final court approval:

Morgan Stanley agreed to pay more than $10 million to resolve a lawsuit alleging it improperly refused to reimburse its financial advisers for work-related expenses such as client entertainment.

Pongsri Thai Restaurant in New York agreed to pay $3.7 million to a group of workers to resolve allegations that the company violated overtime and minimum wage regulations.  

FedEx agreed to pay $3.1 million to settle a suit brought by a group of drivers in western New York claiming they were misclassified as independent contractors and subject to improper pay deductions.

Not all these cases are resolved through a settlement. For example, a federal jury in Florida recently awarded $1.2 million to a group of forepersons employed by the tree service company Asplundh who alleged they were improperly denied overtime pay. It is not yet clear whether the company will appeal.  

A federal appeals court recently upheld a $4.6 million verdict won by a group of exotic dancers who had alleged that the Penthouse Club in Philadelphia misclassified them as independent contractors and thus denied them minimum wage and overtime protections.

Two things are made clear by this list. The first is that the problem of wage theft is pervasive. It is present in both old economy and new economy companies and in both highly paid and low-wage occupations. The culprits are both large employers and small ones, and the problem can be found all over the country.

The second conclusion is that, despite adverse rulings from the U.S. Supreme Court and efforts by employers to make it as difficult as possible for workers to sue, there is no sign yet that the flow of successful collective action wage and hour lawsuits is receding.

This is vital at a time when the Trump Labor Department has been seeking to replace federal enforcement with a dubious program promoting voluntary compliance by employers. For now, workers are holding their own in the ongoing battle over paycheck abuses.

The Continuing Battle Over Workplace Rights

The claim that everyone is entitled to his or her day in court is supposed to be one of the bedrock principles of the U.S. legal system. This notion, as it applies to workplace abuses, took a big hit in the Supreme Court last year, and now the National Labor Relations Board is making matters worse.

In its controversial Epic Systems ruling in May 2018, the high court held that employers can compel their workers to sign agreements waiving their right to sue over issues such as wage theft and discrimination and limiting their redress to arbitration actions. Because these actions are individual rather than collective and are not part of the public record, arbitration makes it much easier for corporations to avoid paying out substantial damages for their misconduct.

The pro-business majority on the NLRB just pushed through a decision that gives employers an additional opportunity to implement a mandatory arbitration system. The board ruled that companies may impose such a system after a Fair Labor Standards Act collective action lawsuit has already been filed, in order to prevent additional employees from signing on to the suit.

The board also affirmed the right of an employer to discharge a worker who refuses to sign a mandatory arbitration agreement.

This patently unfair decision is another indication of the lengths that the corporations and their advocates will go to circumscribe the rights of workers. We should expect to see more of these moves, because the Epic Systems ruling has not yet put a major dent in class action lawsuits.

There has not been a significant decline in the number of cases filed, and there continues to be a steady stream of settlement announcements, especially for cases filed in California, which gives workers additional legal tools to deal with wage theft in particular.

Here are some recent examples of these settlements:

Wells Fargo agreed to pay $35 million to a group of 38,000 bank employees who alleged they were improperly denied overtime pay.

Kraft Heinz agreed to pay $3 million to settle a suit brought on behalf of 4,000 workers alleging that the company violated California labor law by failing to pay overtime.

The operator of hundreds of Panera Bread restaurants agreed to pay $4.6 million to settle allegations that it improperly classified assistant managers as executives to deny them overtime pay.

A group of drivers and their assistants who delivered Best Buy merchandise signed a $3.25 million deal to settle a lawsuit alleging they were misclassified as independent contractors and consequently shortchanged on pay.

A Massachusetts court gave preliminary approval to a $3.9 million settlement of a class action brought by former commission-only salespeople at the mattress retailer Sleepy’s who argued they should receive overtime pay.

If corporate interests get their way, these settlements will disappear, and workers who are cheated on the job will have to settle for the crumbs they may get through individual arbitration filings.