By: Thomas Eden
Friday, August 21, 2015
No Good Deed Goes Unpunished
By: Thomas Eden
A collective class of Publix Super Markets Inc. workers filed a Fair Labor Standards Act (FLSA) Complaint in Tennessee federal court claiming Publix does not include overtime pay consideration in holiday bonuses and other employee benefits. Publix has a quarterly profit sharing bonus the company gives to hourly employees, a Christmas bonus, paid time for six holidays a year, a Prevention Plus Award for reviewing loss-prevention materials, and tuition reimbursement. The issue is important because under the FLSA, the weekly overtime pay calculation is based on other compensation received by the employee, that is not a gift, but measured by or dependent on hours worked, production, or efficiency. The extra compensation in turn increases the “regular rate” upon which overtime is computed.
On Wednesday of this week, the Judge ruled that Publix must include holiday pay in employees’ regular rates for overtime calculations since it is not a payment made for a period when no work is performed. However, the judge said the retail bonus, holiday bonus, tuition reimbursement, Prevention Plus Award, and various prizes and awards are excludable from the regular rate calculation.
The Judge reasoned that, “Publix’s plan requires the employee to work on the holiday, if scheduled, in order to receive the holiday pay. The fact that some employees are not scheduled for work on the holiday (or are excused from work for various reasons) and so receive pay for the holiday even though they did not work does not render the payments excludable from the regular rate.”
The Judge also found critical that upon receipt of the Handbook, each Publix employee was required to sign a form acknowledging receipt of the Handbook which explicitly states, “This handbook is not a contract of employment” and that “Publix reserves the right to modify, amend, eliminate, or deviate from any or all policies, procedures and practices without prior notice....” Based on these explicit disclaimers the Judge held that that the handbook did not create contractual rights in this case but rendered the other benefits a gift excludable from the overtime rate calculations under the FLSA.
The Judge entered judgment in favor of the Publix employees on the inclusion of holiday pay claim and he will determine damages and attorney fees.
Common Sense Counsel: This continues a trend of plaintiff-side lawyers launching class and collective actions based on technical violations when the employer is trying to do a good deed for it employees. FLSA violations are the most common and costly collective action lawsuit being brought and employers are paying out millions in settlements and attorney fees. With the FLSA self help, to determine if you are in compliance is simply not a legal option and an ounce of prevention with a wage and hour audit is the only risk reduction strategy. The top three most costly violations are: 1) Misclassification of Exempt Employees; 2) Not Counting Every Hour Worked; and; 3) Not Calculating Overtime Pay the FLSA way.
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 firstname.lastname@example.org or 334-246-2901. Blog at www.alabamaatwork.com