As many as 2,800 state employees – or more than a third of the government workforce — could be eligible for overtime back pay should they win a lawsuit against the state.
A court-approved notice will be sent to state workers over the next 10 days or so, inviting hundreds of state workers to join a collective action lawsuit against the state for allegedly failing to fully compensate employees for overtime. The filing deadline is March 30.
U.S. District Court Judge William Sessions ruled in August that the complaint has merit, and he allowed it to move forward. The lawsuit alleges the state of Vermont unlawfully withheld overtime wages. At that time, 200 employees had joined the collective action.
Sessions rejected the state’s arguments to dismiss the complaint, which asserts that the state of Vermont violated the Fair Labor Standards Act when it paid certain hourly workers “straight time” instead of time and a half for work performed in excess of a 40-hour workweek.
The plaintiffs are seeking back pay, liquidated damages (an amount equal to back pay), interest, attorneys’ fees and costs.
At a press conference on Tuesday, the commissioner-designee of the Department of Human Resources, Kate Duffy, said the state would defend its litigation “vigorously.”
“To my knowledge there has not been a finding that a particular plaintiff is entitled to overtime,” Duffy said. “Certainly there has been no assertion that there’s been a widespread violation throughout state government.”
Thomas Somers, the attorney who is representing the workers for the law firm of Bergeron, Paradis and Fitzpatrick in Burlington, said new plaintiffs will have until March 30, 2011, to join the suit, at which point his legal team will undertake discovery, take depositions of state officials, “potentially file motions and go to trial if necessary.”
Unlike a class action suit, in which automatic compensation is given to affected parties, a collective action suit requires participants to “affirmatively opt in.” State workers who wish to be eligible to receive back pay awards must join the pending lawsuit to recover unpaid overtime compensation possibly dating back to Jan. 7, 2007. Ordinarily, the statute of limitations under FLSA is two years. Somers is arguing that the violation is “willful,” and therefore subject to a three-year statute of limitations. He asserts that the Douglas administration knowingly infringed on employees’ benefits.
Employees who could qualify for court-awarded compensation are listed in pay grade 23 or above and are part of the non-management, supervisory, judiciary and corrections bargaining units represented by the Vermont State Employees Association. They include social workers, probation officers, corrections officers, VTrans employees, among dozens of other positions.
The legal arguments revolve around whether the employees in question are salaried or hourly workers, and whether they meet the criteria of executive, administrative or supervisory function.
The total amount of damages and back pay qualifying state workers could be entitled to is unknown because many more employees are expected to sign on to the suit, according to Somers.
The court has ordered that the matter go to mediation. Donald (“Tad”) Powers, a Middlebury-based attorney and professional mediator, will try to broker a confidential deal between the two parties.
The judge’s “interlocutory order” cannot be appealed to the 2nd Circuit Court in New York State.
The state’s argument
The state of Vermont, represented by Steve Collier, counsel for the Department of Human Resources, and Keith Aten, assistant attorney general, asked the court to dismiss the overtime claim on the grounds that the employees suing the state were salaried – not hourly workers. Collier argued that the plaintiffs in the case received a predetermined amount of pay, and he equated that set payment with salaried earnings. He said the plaintiffs should be obliged to prove that they were hourly wage earners by indicating instances in which they have lost pay for taking time off.
“Every single state employee is paid at an hourly rate,” Collier said, according to July 9 court documents.
Collier then went on to compare the average employee’s hourly wage with the governor’s salary. “You divide the governor’s statutory salary by 2,080 (hours), and when he gets a pay stub, it says hourly rate of pay,” Collier told Sessions.
Collier also argues that overtime is a function of the union contract – not a right protected under the Fair Labor Standards Act.
“The reality is, none of the plaintiffs are entitled to any overtime at all,” Collier said. “The only reason they get (straight) overtime is because of the contract.”
Collier dismissed Somers’ assertion that the state had made an across-the-board decision to deny overtime benefits to workers above pay grade 23. He said the Department of Labor had classified workers individually according to their duties.
Kate Duffy, the incoming commissioner of the Department of Human Resources, also supports this view. “We’re comfortable that a decision was not made across a class but on an individualized basis, which is what is required by the FLSA,” she said at a press conference with Gov.-elect Peter Shumlin on Dec. 8.
The argument for the workers
Somers said the state has drawn an artificial line at pay grade 22. Workers above that level are not eligible to receive time and a half overtime pay. Instead, they receive “straight” hourly pay.
“They’re not salaried – they’re hourly,” Somers said. “If they work one hour, that’s all they get paid, and that’s a clear violation of the Fair Labor Standards Act.”
He accused the Douglas administration of purposely promoting workers from pay grade 22 to pay grade 23 in order to save money on overtime costs.
“That’s what has raised people’s ire,” Somers said. “You might have someone at pay grade 28 with someone who is a 22, and the person who is their junior is making more than they are.”
The Fair Labor Standards Act, which was enacted in the New Deal era, was extended to state and municipal workers in 1985. Though the line of demarcation between hourly workers who are in pay grade 22 and salaried employees in pay grade 23 has existed since then, Somers said, the Douglas administration recently has promoted people to the higher grade to avoid paying employees overtime.
“There is no effort at all by the state to comply,” Somers said.
Somers said the pay grade ceiling is a financial disincentive for workers who want to move up the ladder at a time when morale is already low because of the negotiated 3 percent cut in workers’ pay that went into effect last year. “I think that’s (the cut in pay) led to more people joining the suit,” Somers said.
“There is no reason why anyone would want to go up the step from 22 to 23,” Somers said. “They do that with the social workers; they moved them from 22 to 23. They’re out quite a bit on weekends at night. It was obviously a manipulation to save money.”
The judicial branch pays up
Soon after Sessions issued his ruling, the judiciary gave bargaining unit employees under its purview three years of overtime compensation.
Court Administrator Bob Greemore said the decision “probably had nothing to do with the lawsuit.” His office, he said, was “notified a while ago that there may have been an issue how payroll had coded certain employees.” Those employees, he said, “were mainly pay grade 23 or higher.”
Greemore said 10 to 20 workers, mainly case managers and information technology personnel, had received straight time, and the court system paid them the additional half-time pay.
“I asked the Personnel Department to find out how employees were coded for the Fair Labor Standards,” Greemore said. “I asked human resources to determine who was FLSA-eligible and who was not. Some were improperly coded.”
The coding problems dated back three years; going forward, Greemore said, they will be “properly coded.”
DOL’s FairPay Overtime Initiative
http://www.dol.gov/whd/regs/compliance/fairpay/main.htm
Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees. Section 13(a)(1) and Section 13(a)(17) also exempt certain computer employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week. Job titles do not determine exempt status. In order for an exemption to apply, an employee’s specific job duties and salary must meet all the requirements of the department’s regulations.
