Working Longer--for Less?

Maureen Nasse remembers she was well into one of her typical 70-hour workweeks as a department manager in the Mervyn’s Cypress store when searing back pain struck.

She left to see a doctor. A kidney stone, he said. Stay home.

But the store manager had other plans.

“She called me into her office and said, ‘I realize you’re in a lot of pain. I’ve had a kidney stone before. But the [chain] president’s going to be here in the morning, and I don’t care,’ ” Nasse recalls.

Nasse, whose job paid $28,000 a year, did not receive overtime. Not even after she arrived at 7 that morning and ended up working past midnight. She moved clothing racks and climbed ladders before the pain finally stopped about 11:30 p.m.--when she passed the stone.

Nasse is now part of a lawsuit, and Mervyn’s won’t discuss the specifics of her case. She has submitted her claim to attorneys, who are seeking a class action. Company spokeswoman Carol Johnson said returning an employee to work against a doctor’s advice “is inappropriate. We don’t condone anything like that. No one would.”

But Nasse says constant work pressure caused problems for everyone. “They would always say, ‘Do what you have to do to get it done--but you can’t add hours’ ” to employees’ work shifts. So she slogged ahead, doing the work herself because “it had to get done and I wanted to get promoted.”

In what has emerged as a top workplace issue of the ‘90s, employees at all levels say they are feeling pressure to work longer--and increasingly without extra pay.

“Overtime violations are a pervasive problem in the American economy,” says U.S. Labor Secretary Alexis M. Herman, whose department collected $387.5 million in overtime back wages from 1993 through 1996 in response to employee complaints.

Employers generally acknowledge problems exist but say they are isolated and quickly dealt with. Some claim the wave of overtime cases is linked to unions’ efforts to regain their old strength.

But many critics say the problem trickles down from a “Chainsaw Al” management mentality in which work forces are trimmed and the remaining employees are required to pick up the slack.

Facing demands from top management to eke out ever-larger profits, and with tough competition ruling out price increases, managers at all levels are focused on containing labor costs--sometimes in violation of the law, critics charge.

“I see it as part of the general restructuring that’s going on to increase profits, cut wages and keep from paying benefits,” says UC Riverside sociologist Edna Bonacich, a garment industry expert and union advisor.

Actual overtime pay, often cheaper than paying wages and benefits to extra workers, jumped 9% in manufacturing during the year that ended in April.

A Proliferation of Lawsuits

But the increasing number of high-profile lawsuits filed on behalf of front-line workers and lower-level managers indicates that the problem is not paid overtime, but overtime without pay.

* A Washington state jury ruled in April that Taco Bell cheated nearly 13,000 workers out of overtime. The Irvine-based chain promised to appeal, saying any problems were isolated.

* The Krystal Co., a 240-restaurant hamburger chain, was driven into bankruptcy court last year by overtime disputes involving 7,000 workers. The Chattanooga, Tenn., company settled for $13 million.

* A suit on behalf of 500 Motel 6 assistant managers said time cards were falsified nationwide to show 40-hour weeks. “I posted that amount to my time card even though I was working 12 to 16 hours a day, seven days a week,” one employee said in a letter submitted as evidence. The Dallas chain settled for an undisclosed amount in November.

* In a U.S. Labor Department case, Iowa Beef Packers last year was ordered to pay $7 million to workers in seven states who had sharpened knives and put on work gear on their own time.

Albertson’s, the nation’s fourth-largest market chain and historically its most profitable, is accused in lawsuits of fostering “off-the-clock” labor--work hours not recorded on time cards--with bonuses that rewarded managers for holding down overtime and workers compensation claims. Company spokesman Michael J. Read called the charges “wildly and even grotesquely exaggerated.”

The Boise, Idaho-based company is fighting seven overtime lawsuits in California and the other 19 states in which it does business. The suits are mainly financed by the United Food and Commercial Workers union, which has sponsored similar suits against other companies nationwide.

‘It’s Become . . . the Lawsuit Du Jour’

Some employers and labor scholars attribute the wave of overtime cases to unions desperate for new members--and to lawyers sensing a new issue to add to their quivers of workplace discrimination and harassment complaints. “It’s become kind of the lawsuit du jour,” said Read.

Mervyn’s spokeswoman Johnson says many other retailers are facing lawsuits accusing them of cheating employees out of overtime. “I got a sympathy call from someone at Chief Auto Parts to say, ‘We’re going through this too,’ ” she said.

But Tustin lawyer Robert W. Thompson, a self-described anti-union Republican who works mostly for employers, thinks she’s missing the point.

Thompson has filed two lawsuits in Orange County Superior Court seeking class-action status for Nasse and 1,750 other employees at Mervyn’s California stores, claiming managers were misclassified as exempt from overtime and assistant managers were pressured to work overtime without pay.

“The pendulum has swung too far,” says Thompson, who is seeking $111 million in back pay for his clients. “It’s allowing big business to do whatever it wants.”

The recent spate of private lawsuits comes as pressures intensify to revise a federal law mandating time-and-a-half pay for work beyond 40 hours a week, and to scale back a California rule requiring it for work beyond eight hours a day.

On the federal side, President Clinton seems sure to veto a Republican proposal to allow workers to trade overtime pay for time off, but he has said he would support a revised version.

And a Republican-dominated commission recently dropped the state’s daily overtime rule for about 8 million working Californians. That action, which would take effect in 1998, is being challenged in court.

The lawsuits also follow years of declining government budgets for enforcement of minimum-wage and overtime violations.

Not only did the number of wage and hour investigators in the U.S. Labor Department drop from 1,059 in 1980 to 791 in March 1996, but those remaining were given additional duties.

Herman, the new Labor secretary, said the department “remains committed to strong enforcement against overtime violators.”

Its 1997 budget grew and 200 investigators were added, mainly concentrated in low-wage industries in areas like Southern California with large immigrant populations.

But given the government’s limited resources, that doesn’t leave much left over for policing higher-paying industries, labor experts say.

“Many employers can afford to take a calculated risk that they can violate the statute with impunity,” said Reginald Alleyne, a UCLA Law School labor professor and arbitrator of labor disputes.

At most smaller companies, “no one will file anything--no private attorneys, and not the government,” Alleyne said. “Except when you get large numbers of employees, these actions do not pay off for private counsel.”

Stuart Kaye, a former California Labor Commission lawyer, says he quit because Wilson’s administration gutted labor law enforcement, cutting staff and closing offices.

A Wilson spokesman blamed tight budgets, saying state regulators remain committed to enforcement and have begun adding investigators again.

Kaye is now in private practice with Don D. Sessions, a Mission Viejo lawyer whose firm represents employees. Sessions says overtime abuse is so common that he routinely asks about it and adds it to lawsuits when employees come in to file complaints over other issues.

“That’s often the hammer that gets it settled,” Sessions said.

Legal Gray Areas Cause Confusion

Many of the problems stem from confusion over state and federal laws and the gray areas they create.

One big misconception is that salaried workers--those who get fixed pay rather than an hourly wage--are automatically exempt from overtime pay.

In fact, they generally are not unless they have real managerial, creative or intellectual jobs and spend most of their time operating independently from direct supervision or a company task list.

Ben Fischer, a Carnegie Mellon University labor professor and former steelworkers union official, thinks company lawyers are steering businesses into questionable practices, particularly with aggressive definitions of who is exempt from overtime.

“Years ago, corporate lawyers were super-careful, and they used to do anything that would avoid trouble,” he said. “Now I get the sense that their job is to help the company get away with things rather than give responsible advice.”

The wrong advice can be costly.

In a 1994 Labor Department case, General Dynamics Corp.’s Electric Boat Division agreed to pay more than $5 million to employees misclassified as exempt, mostly planners and engineers.

And in a 1996 California case separate from the union-backed lawsuits, an Albertson’s grocery manager, the market’s second-in-command, won $134,000 in back wages. Classified as exempt, he had been scheduled to work six 12-hour shifts a week. But the state labor commissioner ruled he was due overtime pay.

Albertson’s is appealing the ruling.

Worker Angst Seen as Prompting Suits

In many ways, the overtime lawsuits reflect changing relationships between workers and the companies that employ them.

Interviews with dozens of workers and reviews of testimony in the court cases reveal far more than simple anger over lost wages. Many employees felt defeated by jobs that seemed driven entirely by financial formulas. They felt the need to fight back against what they perceived as unfair treatment.

Want to call in substitutes for sick workers?

That was banned at Mervyn’s when sales slipped, managers said.

A slow morning at Taco Bell?

Washington state employees testified that everyone knew the manager’s bonus depended on labor-to-sales ratios; some workers said they’d show up on schedule then were told to clock in only when it got busy.

An Albertson’s memo titled “20 Good Ideas on Overtime,” which the union says was widely posted in Washington state stores, began: “1. Don’t allow overtime . . . NOBODY IS WORTH IT!!”

It ended: “20. Don’t allow overtime . . . NOBODY IS WORTH IT!!”

Albertson’s spokesman Read said the memo was not written at the corporate level and violated company policy.

The United Food and Commercial Workers union estimates its suits could cost Albertson’s $150 million in California alone. The company tells investors it expects they’ll have no material effect and dismisses them as union public relations.

Joe Peterson, the UFCW official overseeing the suits, says the union is only fulfilling its obligation to protect workers’ rights. Seeing the union actively involved in workplace litigation may improve the union’s status in organizing drives, but it’s “absurd” to suggest the suits are somehow designed to pressure workers into joining, he said.

“It’s an effort by the company to sidetrack the issue, and the issue is that they cheat,” Peterson said. “The union is in effect just being the watchdog of state and federal labor law.”

The Albertson’s plaintiffs say they have collected 5,000 claims from workers. Among those who responded to the union’s appeals was Jeri Gouber, 51, a bookkeeper at a Ukiah store for 12 years who claimed she routinely falsified time records--her own and other employees.

Gouber is hoping to be included in the suit, although the statute of limitations has run out in her case. But lawyers for the plaintiffs intend to include her allegations in support of their suits.

In an interview, she said that by the time she quit in February 1994 she was enduring spells of shaking, roaring sounds in her ears and blackouts.

She wound up on tranquilizers and antidepressants and in psychotherapy, where the diagnosis was job stress. She filed a harassment and gender discrimination suit that Albertson’s settled. Both sides agreed not to discuss the settlement.

Gouber said she was scheduled to work 40 hours a week, but often worked up to 60. She said that on the rare occasions when she put in for overtime, “someone would be in hysterics over it . . . at the division office. It would start at the top and work its way down.”

Other workers, especially those on the night shift or in “perimeter departments” like bakery, meat and liquor, also were unable to complete their duties in their scheduled hours, Gouber said.

She said they were told: “If you can’t get the job done, we’ll find someone who can.” But they also were told it was a firing offense to work off the clock.

“No matter what you did you could lose your job,” she said. “So the lesser of two evils was to work off the clock.”

Employees who clocked too many hours would later come to her office, Gouber said, and she would go into the computer and “correct” their time logs on a near-daily basis. She claimed managers knew of the unpaid work but looked the other way. The employees didn’t have to be asked overtly to work extra “because they felt such pressure,” she said.

Read, the Albertson’s spokesman, said it is against company policy to work without pay. He added that when the company found a few overtime violations, it has reimbursed the workers. But he denied any widespread abuse and accused the union of trying to drum up support.

“Overtime, while discouraged, is allowed when it’s necessary. And we are committed to paying employees for any time worked,” he said.

Some Dispute Broad Worker Discontent

Despite the sheer size of some of the lawsuits, many doubt that employee discontent is sweeping the national workplace.

Salomon Bros. supermarket analyst Jonathan Ziegler notes that with the economy healthy, and given the high turnover in retail businesses, good employees can always get jobs elsewhere, Ziegler said.

But union officials, plaintiffs lawyers and workers themselves say many have left--some voluntarily, many with disabilities brought on by job stress--and that the low unemployment rate has made it easier.

At Mervyn’s, “people were quitting left and right because of what they were doing,” said Joseph Friedman, who was hired as a $42,000-a-year manager at the chain. Friedman has also submitted a claim to attorneys, who will attempt to include him in the lawsuit.

During the Christmas season, “They had me working 18-hour days, and I’d be back the next day after five hours of sleep,” Friedman said.

Friedman, 38, of Simi Valley, said that after Christmas he asked for time off to compensate for the six- and seven-day workweeks, “And they just said, ‘We don’t do that.’ ”

He quit in February, taking a $12,000 salary cut to work for Office Max.

Nasse, the Mervyn’s department manager, said she feared retaliation if she reported the kidney stone incident to her boss’ supervisors and “was just too young and too stupid” to do so or resign.

For years, she hoped to become a store manager. But as her workweek extended to 85 hours during the holidays, she decided it wasn’t worth it.

So when her husband got a new job in Missouri in early 1996, she was more than happy to quit.

“It just got to the point where I said ‘No way. I’m not doing that.’ ”

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Who Gets Overtime

State and federal laws determine who gets overtime and when employers are required to pay it. Employees are grouped as exempt from wage and hour laws or nonexempt; those who are exempt do not receive overtime pay. Category definitions:

Exempt

Salaried employees with advanced knowledge or education. State law requires exempt employees spend at least 50% of time doing management, administrative or professional work, while federal law requires 60% for retail and service employees and 80% for non-retail. State law is construed strictly and federal law loosely--based on employee’s primary duties. Employers must comply with law most favorable to the employee. Categories within the exempt classification:

* Management: Primary duty is management; directing work of two or more full-time employees; have authority to hire and fire or make recommendations regarding employment status of others, exercise high degree of judgment in matters of substantial importance. Cannot be production line workers or working foremen.

* Administrators: Perform office or non-manual work related to management policies or general business operations; regularly exercise discretion, judgment in substantial matters, freedom from immediate direction or supervision; either assist proprietor or executive, perform specialized or technical work, or execute special assignments.

* Professionals: Perform work requiring advanced knowledge and education, work in artistic field that is original and creative, or work as a teacher; regularly exercise discretion and judgment; perform work intellectual and varied in character, accomplishment of which cannot be standardized as to time. Examples: Doctor, attorney, engineer, accountant, teacher

Nonexempt

Employees whose duties require less training and little or no administrative or managerial duties, regardless of whether they are salaried or paid by the hour. Examples: Office clerk, legal secretary, paralegal, bank clerk, switchboard operator, some executive secretaries

Source: U.S. Department of Labor

Researched by JANICE L. JONES / Los Angeles Times