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Thursday, April 23, 2015

Don’t Be Like Lady Gaga


By: Tommy Eden

Jennifer O'Neill worked as Lady Gaga's personal assistant for 13 months until she was terminated in March 2011. Both parties had agreed orally at the outset that O'Neil would receive a flat rate of $75,000 a year for her services.

O'Neil, in her Fair Labor Standards Act (FLSA) lawsuit, claimed that Lady Gaga expected to be working or available to work around the clock, attending to Stephanie Germanotta’s (Lady Gaga’s real name) makeup, hair and other cosmetic details, tidying her hotel rooms, and getting her to events on time. The two generally shared a bed during tours, with the singer-songwriter waking her up in the middle of the night to change a DVD she was watching or take care of some other chore. O’Neil claimed in her suit she was due overtime pay for every hour of every day beyond 40 hours a week during her 13 months of employment.

Lady Gaga's attorneys sought to have the complaint dismissed but the federal district judge disagreed and allowed the case to go forward. The parties eventually settled for an undisclosed amount. One of the interesting arguments made by Lady Gaga was that whatever overtime O'Neil might be due should be calculated under the fluctuating work week method. If Lady Gaga would have taken time to get wise counsel on a written document in compliance with the FLSA her legal saga could have been avoided.

Common Sense Counsel: This is really a lead into the shocking fact that the United States Department of Labor will shortly be reforming the nations overtimes rules for exempt employees. Currently the white-collar exemption is at $23,660 per year and will most likely be doubled to $45-$50,000. Literally millions of workers currently classified “salary exempt” will no longer meet the salary test so employers are going to have to find alternative ways to calculate overtime or face a huge increase in their cost of doing business.
           
Under the FLSA regulations, there are two options employers should consider. Like the federal judge mentioned in the Lady Gaga case, the fluctuating workweek method and also the BELO contract. These methods provide generally lower overtime cost than traditional overtime models and allows employees to continue the status of "salary".

Under the FWW model the employer pays a fixed salary for up to 40 hours work in a week and an additional halftime rate for hours worked over 40. The benefit to employers is that the regular rate for overtime weeks is calculated by dividing the fixed salary by the number of overtime hours worked in that week.

The BELO contract essentially allows employers to prepay overtime for up to 50 hours at a rate that may be lower than would be otherwise possible. Like the FWW method, several conditions must be met, but at the end of the day an employer can substantially lower the overtime cost for those employees who regularly work more than 40 hours.

Tommy Eden is a partner working out of the Constangy, Smith & Prophete, LLP offices in Opelika, AL and West Point, GA and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at teden@constangy.com or 334-246-2901. Blog at www.alabamaatwork.com and follow on twitter tommyeden3