The Sneaky Way One Company Tried to Keep Workers from Suing for Overtime

Employer tried to pre-empt lawsuit after Department of Labor investigation

Overtime violations can be a nightmare for employers. Not only might they be on the hook for paying huge sums in back wages, they may also end up facing hefty fines – and even imprisonment in some extreme cases.

That might be why some employers attempt to make overtime complaints disappear as quickly as possible. The problem is that in their haste to settle a complaint, companies may fail to conform to the process prescribed by law.

Result: Workers who aren’t familiar with federal regulations may end up settling for less money than they’re owed.

Staffers were misclassified

That’s what nearly happened to a group of workers at a company called ActionLink.

Employees known as “brand advocates” had to travel to retail stores to educate salespeople about certain products, as well as suggest ways to sell the products to consumers. Brand advocates worked from 50 to 75 hours each week.

The brand advocates didn’t sell directly to consumers or to stores. Despite that, the company classified them as “outside salespeople” – which meant that they weren’t eligible for overtime.

The brand advocates complained to the Department of Labor (DOL) that they were being illegally denied overtime. The DOL investigated and found that the company misclassified the employees.

Mitigating the damages

The company quickly re-classified the brand advocates, came up with a calculation to determine back overtime pay, and issued the workers checks. However, the check stubs contained language that stated that by cashing the check, the employee was agreeing that he or she had received full payment for any wages earned.

That didn’t stop a group of brand advocates – some of whom had cashed the checks and some who hadn’t – from suing for overtime violations under the Fair Labor Standards Act (FLSA).

The company attempted to have the case thrown out. It argued that the employees who cashed the checks weren’t eligible for any additional compensation because they’d waived their rights to additional monies.

The court didn’t buy it. It claimed that the language on the checks was insufficient to alert people of the consequences the company intended.

In addition, the court pointed out that people can only waive their rights under FLSA by agreeing to a settlement that is overseen by the Secretary of Labor or by a district court. Here, the DOL had not approved the language on the checks, so the workers were free to continue with their lawsuit.

(The case discussed here is Beauford v. Actionlink.)

Contact the Murphy Law Group Now for a Free Consultation

As this case shows, employers may bank on the fact that most employees aren’t familiar with laws pertaining to compensation under the FLSA. That’s why it’s a good idea to speak to an attorney if you think you may have been illegally denied overtime or other wages.

Email us at murphy@phillyemploymentlawyer.com, or call (267) 273-1054 for a free consultation.