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Hourly Employees Eligible to Sue for Unpaid Overtime

CLC 226If you are an hourly employee working without a guaranteed monthly rate of pay, you are likely eligible for unpaid overtime even if your hourly wage is high. Don’t get caught in the trap of working constant overtime. If you are not a salaried employee, this is a violation of your legal rights.

The Case: Negri v. Koning & Associates

In 2013, the California Court of Appeals reviewed a situation where an employee who had been making significantly more money than the average worker, was still subject to California overtime law. In Negri v. Koning & Associates, Mark Negri was an insurance claims adjuster for Koning & Associates. He was paid $29 per hour but was given no minimum guarantee of pay per month. Although he worked more than 40 hours per week, every week, he was never paid more than $29 per hour. As a result Negri sued his employer for violating California overtime law. The employer argued that Negri was a salaried employee, subject to exemption from overtime.

The Definition of a Salaried Employee

Under California law employees are not subject to overtime pay when:

  1. they meet one of the duties tests for exemption,
  2. they customarily and regularly exercise discretion and independent judgment in performing their duties,
  3. they earn a monthly salary that amounts to twice the minimum wage.

In reviewing these elements the court determined that Negri seemed to satisfy all of the above prongs of the test, except for the salary aspect. Although he earned much more than twice the minimum wage, there was a question as to whether his pay could be classified as a salary. The court found that the definition of salary is quite specific, it does not merely mean pay. Rather, it is “a fixed rate of pay as distinguished from an hourly wage” that is not subject to reduction because of the quantity of hours worked or the quality of work. The employer had admitted that Negri was paid based on the number of hours he worked, and that alone dictated his pay. Because of this the court held that Negri had not been paid a salary and was thus entitled to overtime pay.

What This Case Means for You

This is a very helpful case for employees because Negri would have been exempt from overtime pay if his employer had merely set an established pay rate. There are many reasons why an employer would want to require employees to be paid hourly. The biggest reason is that it ensures that they are only paid for time the employee is productive. However, if an employer does not guarantee a set amount of pay per month or year, the work is considered hourly and subject to overtime law.

Keep in mind that different categories of employees have different overtime requirements. To view a full list of the categories of employees exempt from overtime law visit the California Department of Industrial Relations website.

If your employer has not paid you the full amount you have earned you may be entitled to a class action lawsuit or settlement against them. Contact experienced California wage and hour attorney Michelle Baker today. Call (858) 452-0093 for your Free Consultation.

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Court Finds That Workforce of FedEx Ground Drivers are Employees, Not Independent Contractors

As a California employment firm specializing in unpaid wages and discrimination, Baker Law Group, LLP was extremely happy to hear of a recent ruling regarding FedEx ground drivers. This case ruling makes an important point regarding employees who have been misclassified as “independent contractors.” The following article contains very helpful information for potential clients who may find themselves in a similar situation.

The following is a special report from Leonard Carder, Copyright (C) 2014 PR Newswire.

On August 27, 2014, the Ninth Circuit Court of Appeal ruled that a class of 2,300 individuals working for FedEx Ground was misclassified as independent contractors instead of employees. As a result, FedEx may owe its workforce of drivers hundreds of millions of dollars for illegally shifting to them the costs of such things as the FedEx branded trucks, FedEx branded uniforms, and FedEx scanners, as well as missed meal and rest period pay, overtime compensation, and penalties. The case is known as Alexander v. FedEx Ground, and covers employees in California from 2000 – 2007. The ruling can be found on the Leonard Carder website at leonardcarder.com.

Employees Versus Independent Contractors

Judge Fletcher’s majority opinion was very clear on the question of whether these workers are employees or independent contractors, stating “We hold that plaintiffs are employees as a matter of law under California’s right-to-control test.”

The court’s decision is the most recent in a series of cases that have methodically proven that FedEx Ground’s independent contractor model is built on the legal fiction that its drivers are in business for themselves. The Ninth Circuit decisively rejected that claim. The court’s finding in Alexander that drivers in California are covered by California’s workplace protection statutes not only impacts one of FedEx Ground’s largest workforces but could influence the outcome in over two dozen cases nationwide in which FedEx Ground drivers are challenging the legality of their independent contractor classification. Millions of packages are delivered every day across the state under the control, direction, and supervision of FedEx Ground. In addition, many trucking companies have been operating under a similar model in which they classify their drivers as independent contractors.

“FedEx Ground built its business on the backs of individuals it labelled as independent contractors, promising them the entrepreneurial American Dream,” said Leonard Carder attorney Beth A. Ross who is a national leader on cases covering the exploitation of workers by mischaracterizing them as independent contractors. “However, as Judge Trott said in his concurring opinion, not all that glitters is gold.”

FedEx now requires its so-called contractors in California to hire a secondary workforce of FedEx drivers, who do the same work as the plaintiffs under the same contract. The Alexander decision calls into question FedEx’s strategy of making plaintiffs the middle men between the secondary workforce of drivers and FedEx.

“We have heard of many instances where the secondary drivers are earning such low wages that they have to rely on public assistance to make ends meet,” said Ross.

Everyday Work for FedEx Ground Drivers Includes:

  • FedEx Ground drivers were required to pay out of out of pocket for everything from the FedEx Ground branded trucks they drove (painted with the FedEx Ground logo) to fuel, various forms of insurance, tires, oil changes, maintenance, etc. as well as their uniforms, scanners and even workers compensation coverage.
  • In some cases workers were required to pay the wages of employees who FedEx Ground required them to hire to cover for them if they were sick or needed a vacation, to help out during the Christmas rush, and in some cases to drive other FedEx Ground trucks.
  • After paying these expenses, a typical FedEx driver makes less than employee drivers at FedEx Ground’s competitors like UPS, and receives none of the employee benefits, like health care, workers compensation, paid sick leave and vacation, and retirement.
  • In addition, their employment was subject to the whims of FedEx management and FedEx Ground’s decisions on staffing and routes left the employee drivers stuck with expensive long-term truck leases on FedEx branded trucks.

The drivers’ attorney Beth Ross added, “Nationally, thousands of FedEx Ground drivers must pay for the privilege of working for FedEx 55 hours a week, 52 weeks a year. Today, these workers were granted rights and benefits entitled to employees under California law. To be clear, the Ninth Circuit exposed FedEx Ground’s independent contractor model as unlawful.”

Among the noteworthy elements to emerge from the litigation, FedEx Ground’s practices take advantage of workers and are anti-competitive. FedEx Ground’s so-called “contractors” do the same work as UPS and U.S. Postal Service drivers for substantially less pay and without benefits. This plays out in two distinct ways. FedEx Ground saves money and harms drivers and the public by avoiding employment taxes and workers’ compensation insurance, and complying with all other workplace protections.

Ross added, “This ruling will have seismic impact on this industry and the lives of FedEx Ground drivers in California.”

If you believe you have been unfairly missclassified as an Independent Contractor, you may be entitled to compensation. To learn more, contact experience California employment attorney Michelle Baker. Schedule your free consultation today by calling (858) 452-0093.