Les Schwab Verdicts Highlights Overtime Wage Law

Last week, a Portland, Oregon jury found that Les Schwab Tire Center should have paid assistant mangers overtime wages, and that these employees averaged 66 hours per week. The case illustrates that the job duties determine whether an employee gets overtime pay; it is not the job title or only whether they are paid a “salary.” The verdict determined the liability phase. Another phase of the trial will determine the dollar amount due.

The final verdict will likely be multimillion dollars. considering the following. The decision could impact up to 200 workers, who averaged $4,000 per month in wages. For the additional 26 hours per week, Les Schwab will likely owe about $3,900 per month per employee. A court may double the wages due as a penalty, unless the employer can prove that it operated in good faith. Other penalties may be at stake, too. Plus, the employer will have to pay the attorney fees of the employees.

Oregon and United States law controls hours of work. Generally, employers must pay workers 1½ times their normal rate of pay for hours worked more than 40 in one week, unless the employees are “exempt” from the law. Here are a few of the general exemptions:

EXECUTIVES and SUPERVISORS, who (1) direct the work of at least two employees, (2) play a big role in hiring and firing employees, (3) customarily exercise judgment or discretion, as compared to being told what to do, (4) management is their primary duty, AND (5) their salary exceeds a certain threshold. Apparently, the decision in Les Schawb had much to do with whether these “assistant managers” are primarily managers or mostly ran around changing tires.

Also exempt are PROFESSIONAL EMPLOYEES, who must meet several tests. A partial list, includes (1) they perform work that requires advanced knowledge customarily acquired by a prolonged course of study, (2) perform work that requires invention, imagination, originality, etc., (3) teach in a school system, practice law, or medicine, and (4) their primary duties are the professional duties.

Others who are exempt, include, (1) outside salespersons, (2) casual babysitters, (3) certain agricultural workers who meet the criteria, (4) seasonal employees summer camps for nonprofit organizations, or for profit businesses that gross less than $500,000.

The above is just a partial list. For more information, the US Department of Labor publishes information on the Fair Labor Standards Act. Oregon’s Bureau of Labor and Industries publishes information on the Oregon’s Overtime Wage law. BOLI answers some overtime pay FAQs, too.

Jeff Merrick, Merrick Mediation
Copyright 2012