Overtime Pay Is the New Job Battlefront

Lori Langer poured herself into her job, putting in extra time calling prospective students as an admissions advisor at American Intercontinental University Online.

“I would stay an [extra] hour or two a day and come in on Saturday for four to six hours,” she recalled. “In order to get my job done, that is what I had to do.”

She liked the work, and liked the overtime pay too.

But within a few months her bosses at the online education company told her she could no longer get paid for overtime, she said. Tear up your time sheets, they allegedly told her.

Although not getting overtime pay did not seem right to Langer, she didn’t do anything about it until she was contacted by a lawyer representing some of her colleagues in a federal class-action lawsuit claiming overtime pay abuses. She is no longer employed by the company.

With their case churning along in federal district court in Chicago, she and about 175 co-workers have joined what some experts say is the nation’s fastest-growing legal battlefront between workers and companies. Since 2000, the number of wage-related cases filed in federal courts has doubled, and most involve overtime claims.

Experts say the increase in overtime lawsuits results from a lack of clarity in federal law, which has set rules for overtime wages since 1938.

An update to that law was supposed to clarify eligibility requirements and extend protections to an additional 6 million workers, but many say the revisions only muddied the water and invited litigation.

Traditionally, all workers were eligible for time-and-a-half overtime, except for those in the executive, administrative and professional categories. The 2004 federal changes sought to define more clearly those exempt categories by using new job-duty descriptions such as “exercises discretionary and independent judgment.” The change was made because language such as “holds a position of responsibility” was deemed too vague.

But in reality the new descriptions can seem just as fuzzy, while job functions themselves have blurred in an era of corporate downsizing. Clock-punching issues also have become more complicated because of increased travel and flexible schedules.

Tammy McCutchen, a Washington lawyer and former administrator of the U.S. Department of Labor’s wage and hour division, confirmed that problems persisted despite the changes in federal law.

“We tried to change the law and make it clearer. But there are still some uncertainties,” McCutchen said.

A major factor is that it has become more difficult to define as overtime the hours someone might work because of individual schedules and time spent out of the office. For example, a saleswoman does not qualify for overtime while she is traveling. But the second she settles down and begins using a computer, she does qualify, McCutchen said.

Similarly, job descriptions can seem to overlap. A financial advisor who counsels clients cannot get overtime pay, she added. But someone who takes investors’ orders can.

These new debates over questions of who is a boss and who is an employee, or when does work begin, have drawn the attention of lawyers to an area of law that had largely been ignored.

At the same time, the government stepped up its enforcement of wage laws, leading to an increase in the collection of back wages, which are mostly from overtime pay cases. In turn, such intervention has attracted more attention and more lawsuits.

“All employers are thinking about doing audits of their wage and hour practices,” said Chicago lawyer Gerald Maatman Jr., whose firm, Seyfarth Shaw, noted in a recent report that wage and hour class-action suits last year outpaced job discrimination filings nationally.

Maatman credits California’s change of its labor laws in 2003 with triggering an uptick in overtime cases there and elsewhere. The changes made it easier for workers to directly sue companies, expanded the number of workers covered and boosted the penalties against employers.

As the size of the settlements grew in California and elsewhere, and workers’ lawyers won cases, “success begot success. I would call it the copycat phenomenon,” Maatman said.

Last year, for example, State Farm Mutual Automobile Insurance Co. reached a $135-million settlement with claims adjusters, who said they had not received overtime pay, in violation of California law. Allstate Insurance Co. agreed to pay $120 million in a similar lawsuit last year in California. In both cases, adjusters said they had been wrongly classified as exempt, which cost them overtime pay.

And Cingular Wireless agreed to pay $5 million last year to customer service workers after a government investigation that began at the firm’s Springfield, Ill., call center revealed that employees were working off the clock before or after their shifts and not being paid for that work. At the time, Cingular denied wrongdoing and said it had worked with the government to resolve the problem.

In the case involving Langer and others at American Intercontinental University Online, lawyer Robin Potter said the company ran afoul of the law when workers were told that they would not be paid for working more than 40 hours.

“Federal and state law says that if you work it, you get it,” said Potter, who described American Intercontinental’s workplace as a “high-tech sweatshop.”

“The testimony is that people worked five to 15 hours per week for which they were not paid,” Potter said. Workers were told they could only get overtime if they met quotas in recruiting students, she said.

Langer’s former employer is a subsidiary of Career Education Corp.

In a written statement, Stuart Chanen, a lawyer for the company, denied the lawsuit’s claims. The company, he wrote, has paid overtime to hundreds of workers, including those who did not meet their recruitment quotas.

Furthermore, the company conducted its own investigation into the allegations after the suit was filed and “found them to be without merit,” Chanen wrote.

Langer, 60, who had formerly worked in retail sales, said she would come in half an hour early, skip lunch and put in all the extra time needed to make her calls and complete her paperwork.

“I wanted to do my job,” said Langer, who worked at the company for six months in 2002 and 2003, then was placed on disability and later received worker’s compensation because of carpal tunnel syndrome. She returned briefly in 2004 and was let go in January.

When her boss said she could no longer earn overtime pay, she said, she stopped writing down the actual hours she had worked.

“I knew it was wrong, but I didn’t want to rock the boat,” Langer said. “I figured, this is my job and, OK, I’m going to go along to get along.”