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Overtime Wage Theft in South Carolina

Types of Wage Theft in South Carolina: Unpaid Wages and Unpaid Overtime

Wage theft is the term used when employers and businesses fail to pay South Carolina employees all the wages that the employee earned. (At least, it’s the term used by me and other employee advocates; employers call it an “oopsie!”) Wage theft occurs both in traditional wages (weekly paycheck, commissions, accrued PTO) and in overtime and minimum wage cases under the Fair Labor Standards Act (FLSA). (I’ll refer to the FLSA claims as “overtime wage theft” for inflammatory purposes.)

If an employee should be getting paid overtime for the extra hours he or she is working, and the employer refuses to pay overtime, then the employer is engaging in overtime wage theft, which is illegal in South Carolina. (Also currently illegal in South Carolina? Playing pinball before you’ve reached the age of 18. But I’m a sweet-natured felon, don’t worry. )

Most of the wage theft cases I see in my practice come under either the South Carolina Payment of Wages Act or under the FLSA, which are the two laws covering wages or pay in South Carolina. I’ve blogged about wage theft under the South Carolina law before, so I’d like to focus this article on overtime wage theft under the FLSA.

Overtime Wage Theft Comes from Misclassification by the Employer

Most FLSA overtime wage theft claims come when an employer deliberately or negligently misclassifies an employee as exempt from overtime pay. In other words, the employer tells the employee, “You don’t get overtime pay [time and a half], no matter how many hours you work.” And that’s completely fine, if the employee is getting paid a genuine salary of at least $455 a month AND has the duties that meet the FLSA’s requirements to be exempt form overtime pay.

However, the problem arises when the employee clearly isn’t getting paid a salary OR clearly doesn’t work the managerial or administrative duties that would exempt him from the FLSA’s requirements, and yet the employer doesn’t pay overtime at all. In this case, if the employee is working more than 40 hours a week, the employer is getting the benefit of free or discounted labor by not having to pay the overtime premium. That’s where the overtime wage theft comes in (or “wage oopsies!” for all you defense attorneys).

Sometimes, this is a genuine oversight by the company. Perhaps it’s a small business with an owner that doesn’t understand the law, or it’s a close question as to whether the employee is entitled to overtime or not. Those cases do happen, but the law still requires a business owner to make sure that the employees are being paid properly. Often that means hiring a lawyer to vet wage practices and make sure the company is in compliance.

Because, the bottom line is, if the company has misclassified an employee, even if it wasn’t malicious, the company still has to pay to make it right.

Exempt vs. Non-Exempt & Employees vs. Independent Contractors

However, the more egregious examples of overtime wage theft include companies who deliberately misclassify employees as exempt from overtime just so that the companies can save money.

A common variation of this misclassification practice comes when the employer decides to classify employees as “independent contractors” instead of employees. The reason they do this is because independent contractors aren’t entitled to overtime pay or minimum wage under the FLSA, and the company doesn’t have to provide other benefits either. An employer who takes this step without the facts to support this decision risks a great deal of trouble and money later on.

Let Me Explain–No, There is Too Much. Let Me Sum Up.

The determination of whether an employee has been misclassified is extremely fact specific. If you believe you’ve been a victim of overtime wage theft, you should speak with an employment attorney immediately.

And if you believe you’ve engaged in youthful illegal pinballing, you should speak with a criminal defense attorney, because the State will (and should!) vehemently protect the innocent people of this State from wanton, profligate, and underage arcade gamers.

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Read Your Enemies Close, But Read Your Employment Contract Closer

As a general rule, before you sign any employment contract, I highly recommend that you have it reviewed by a particularly dashing employment lawyer near you. Or, at the very least, READ THE ENTIRE EMPLOYMENT CONTRACT YOURSELF BEFORE YOU SIGN. “Why?” you ask, still so innocent, so young.

Because, my friend, otherwise all your dreams will be utterly destroyed and your future career options will be tragically limited to panhandling for change on the I-85 / White Horse Road exit corner.

Well, not quite. But still:  read the contract before you sign it. It’s just good manners, like removing your shoes, socks, and toe lint before entering someone else’s house (or so I’m told; I don’t hold with such social niceties, which is why I’m no longer invited to anyone’s house).

Arbitration Provisions in an Employment Contract Are Enforceable

Why am I bringing this up, other than to provide the sweet, satisfying nectar of legal knowledge to my always-thirsty readers?

Well, because the U.S. Supreme court ruled recently in Epic Systems Corp. v. Lewis that employees can enter into employment contracts that sign away their rights to bring collective and class actions under the Fair Labor Standards Act (FLSA). These employment contracts will instead require employees to bring claims in individual arbitration proceedings instead of regular court.

Arbitration, in a nutshell, is a private lawsuit that does not take place in a courtroom with a jury and a judge. Instead, the parties select a neutral “arbitrator” to serve as the judge and jury. The arbitrator–typically a lawyer–presides over the arbitration and decides the case, including who wins and how much. The arbitration takes place in a conference room, not a courtroom. Also, the parties do not have a right to appeal the decision of the arbitrator except in a very small number of instances. It’s private, confidential, and at least in theory, a little bit faster than waiting for a jury trial.

Private Arbitration Costs Employees More than It Costs Employers

The employees in this case wanted to bring overtime violation claims as a collective or class action, but in their employment contract, the employees had agreed that any legal claims they had against their employer, including overtime claims under the FLSA, must be brought in individual (separate) private arbitration actions, not in state or federal court as a class action.

Employers have begun including these types of arbitration provisions in employment contracts more and more frequently. My theory is that it’s simply more expensive for employees to proceed in arbitration (where the often-unemployed employee has to pay at least half of the arbitration costs, which could be thousands of dollars) than in state or federal court (where the employee only has to pay a filing fee of a few hundred dollars). That gives a company with sufficient money an advantage, which is why companies want arbitration provisions in the contracts. 

In this case, the employees alleged that the arbitration provisions weren’t enforceable because such provisions limited their ability to engage in “concerted activity” through a collective action. The “concerted activity” should be protected under another federal law, the National Labor Relations Act. The Court disagreed, and instead held that employees CAN waive their right to a collective or class action trial in employment contracts. However, the right to trial by combat will always remain inviolate.

Practically Speaking, Most South Carolina Employees Don’t Have Leverage to Truly Negotiate an Employment Contract

Generally speaking, I agree that employees should abide by the employment contracts that they sign, just like everyone else. My concern, however, is that employees are often presented with an employment contract on their first day of employment, along with a host of other documents. They are expected to sign everything placed in front of them, and if they don’t, they don’t get the job.

Not only do the contracts contain arbitration provisions, but they also may contain agreements by the employee to be sued in a different state, or the contracts might contain a non-compete or non-solicitation agreement, which may affect the employee’s ability to get a job later.

Most of the time, the employee doesn’t get a chance to have his/her own attorney review the agreement or to negotiate specific terms. The employee typically has no other option or power to do anything except the agreement or walk back into unemployment. The power dynamic is simply not equal.

Regardless, Make Sure You Read the Entire Employment Contract Before You Sign

The takeaway from this case for South Carolina employees is simply that you should read the entirety of any employment contract you’re asked to sign, and you should make sure you understand the implications of each provision. Ideally, you should ask for a few days to have your attorney review the employment contract with you, and, if you have any bargaining power, negotiate some of those terms so that they’re not so stacked against the employee.

If the contract simply isn’t fair, then you may have to consider looking for another job where the terms aren’t so onerous (hopefully one where where the arbitration itself doesn’t have to be conducted in Dwarvish).

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Retaliation Under the Fair Labor Standards Act

South Carolina employees often fail to report overtime violations because employees fear retaliation if they speak up. Even though the FLSA prohibits retaliation, practically speaking all that means is that an employee has grounds for a lawsuit after termination. Most employees would just rather have their job, which I certainly understand. But I think it’s helpful for South Carolina employees to know exactly what type of reporting or complaining about overtime violations will fall under the anti-retaliation provisions of the FLSA.

What Complaints are Protected from Retaliation?

Not all “complaints” are the same. Complaining to your co-worker about not getting paid overtime won’t provide cover from retaliation. However, internal complaints to members of management, such as complaints to HR or a supervisor, DO qualify for protection. Now, up until 2012, South Carolina employees could not count on protection from making solely internal complaints. Instead, they would have to file a formal complaint with the U.S. Department of Labor first. But in 2012, the federal court of appeals (for the area that includes South Carolina) decided that employees making only internal complaints ARE protected from retaliation.

So now, South Carolina employees can make internal complaints about overtime or minimum wage violations. And, if their employer retaliates, the employees would then have a legal claim for retaliatory discharge under the FLSA. The U.S. Supreme Court has also decided that oral complaints qualify for protection as well, although I always recommend putting complaints in writing as strong proof of the complaint later on. Employers often deny that the employee made any complaint at all, so having an email or letter in hand as evidence is a powerful refutation.

What Types of Retaliation do South Carolina Employees Often Face?

The most obvious type of retaliation is termination. The employee complained, and the employer immediately fired the employee.

I also often see the employer repeatedly writing up the employee who made the complaint. This type of retaliation is easier to prove when the employee has not been written up before (or, at least, not as often).

Employers may fail to promote an employee after the complaint, or put something in the employee’s file that prevents future promotion or advancement.

Increased scrutiny and nitpicking managers are often pretty common, too. The employer or its managers start to find fault with the employee who complaint, often leading to increased write-ups and sometimes termination.

What can  South Carolina Employees do if They Face Retaliation?

If the retaliation is less than termination, such as increased write-ups or failure to promote, you can document the retaliation in an email to HR asking them to investigate. Or, if that doesn’t work, you can contact the U.S. Department of Labor (DOL) to file a formal complaint. Understand, however, that the DOL isn’t likely to file a lawsuit on your behalf, although the DOL can investigate and try to resolve the matter for you.

If you’ve been fired, then a close proximity in time between your complaint about overtime violations and the time of your termination is a strong implication that the firing was retaliatory. You would then have grounds to file a lawsuit in state or federal court, and if successful, you would be entitled to re-employment, lost wages (sometimes doubled by the court in certain circumstances), and your attorney’s fees.

If you believe you’ve been retaliated against, you can contact a South Carolina overtime lawyer for a consultation to review the facts of your case and determine whether a lawsuit would be appropriate.

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Workplace Breast Pumping Rights under the FLSA

Oh, Fairest of all Labor Standards Acts! What delights and protections do you offer to nursing mother employees in South Carolina? Breast pumping rights at work? Well, let’s get to it and not milk the suspense any longer!

In this post, dear readers, you’ll learn how to better express yourself. Or, rather, you’ll learn when and where you can express yourself. And yes, those were just a few breast pumping puns at the beginning of this post, so we’re already off and running!

Who Said Obama Never Gave You Anything Nice?

A little known component to the Affordable Care Act, aka Obamacare, was that employers are now required to provide unpaid break time to their nursing mother employees so that the employees can breast pump throughout the work day as needed. Milk for their adorable little babies, such as this one, who is just probably some random example of a baby who may or may not be be related to me:

I mean, look at him! I SAID LOOK AT HIM! *sigh* Isn’t he just darling?

…..

Ahem. Anyway. Back on point: employers are also required to provide a private location for employees’ breast pumping, and, the law notes, bathrooms don’t count!

This component is actually an amendment to the federal Fair Labor Standards Act (FLSA) and is enforced by the U.S. Department of Labor. Oh, and also enforced by this handsome guy! (Enforcement comes through private litigation in federal and state court, outcome and results cannot be guaranteed, but give me a call and we’ll kick some of that, but by no means a guaranteed all of that, defendant booty.)

It’s lucky for me, too, that this breast pumping provision falls under the FLSA, since I can blog about it here on my famous True Or FLSA blog, and therefore, my “express yourself” joke, already a classic for the ages, fits right in without too many complaints.

Who is Covered by this Breast Pumping Provision?

Keep in mind, however, that these breaks apply only to non-exempt employees (i.e., employees who are NOT paid a salary and who would therefore be entitled to overtime pay). So if you get a salary and don’t get overtime pay, then you aren’t covered by this provision, so just try to keep your breast pumping quietly on that conference call while you work all dem overtime hours, thanks.

Notably, this provision doesn’t apply to companies with less than 50 employees IF the provision of breaks and a location for breast pumping would impose an undue hardship on the company. Whether the burden is an undue hardship is determined by the relative size and resources of the company. So your banana stand, while it may always have money in it, probably won’t be forced to build a standalone breast pumping room.

What Happens If My Employer Violates the FLSA?

He becomes president.

Seriously though, the FLSA prevents discrimination or retaliation on the basis of an employee making a complaint under the FLSA. If you are fired for exercising your rights under the FLSA or for complaining about an employer’s violation of the law, then you may have a legal claim for retaliation, which means you can sue in state or federal court and recoup your lost wages (sometimes doubled by the court) and attorneys’ fees. If you’ve experienced retaliation, give me a call, get it off your chest, and most importantly: don’t nurse a grudge; nurse your baby instead. 

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U.S. Supreme Court Issues New Ruling on FLSA Exemptions from Overtime

Earlier this week, the U.S. Supreme Court ruled that certain employees of a car dealership in California were exempt from overtime pay under the Fair Labor Standards Act (FLSA). Unless you’re an automobile service adviser for a car dealership, the specific factual outcome of the case is likely not important to you.Image result for pictures of car dealerships

However, more importantly, the Supreme Court decided that “exemptions” from overtime should NOT be looked at narrowly. Exemptions, under the FLSA, are the different categories of employees who don’t get overtime pay. For example, supervisors, office managers, and professionals typically do not get paid overtime, so long as the employer pays them a sufficient salary. They are “exempt” from overtime requirements. (I’ve blogged about these exemptions in more detail at my law firm blog page here.)

So now, the Supreme Court has determined that these exemptions should be viewed more broadly by the courts, which means in effect that the Court thinks the tie should go to the runner (i.e., the employer, NOT the employee); this also means, potentially, that for employees whose cases are on the fence, courts may be inclined to side with the business. I expect to see many more companies using this case as a further defense in misclassification cases in the future. However, the fact remains that the duties test–in other words, do the specific duties that the employee performed fall within the proposed exemption?–will still have to be proved by the employer.

Bottom line: South Carolina employers who deliberately or accidentally misclassify employees as exempt from overtime run the risk of an FLSA lawsuit, which can result in back pay awards, liquidated damages, and attorneys’ fees. If you think you should be getting paid overtime and you’re not, give me a call.

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Are Strippers Employees or Independent Contractors?

The question of whether exotic dancers are employees or independent contractors of the strip clubs where the dancers are employed recently wound up in the lap of the Fourth Circuit Court of Appeals. (South Carolina employees fall under the Fourth Circuit’s juris–, uh, –diction and its interpretation of the FLSA.) Luckily, the court managed to keep its eyes focused up here and refused to dance around the issue or beat around the bush, choosing instead to nip this issue directly in the bud.

Are South Carolina Strippers employees or independent contractors?

For some employers, the answer may be polarizing. In McFeeley v. Jackson Street Entertainment, Dynasty McFeeley—clearly destined to be an exotic dancer—and others, sued two strip clubs in Maryland, alleging that the clubs had failed to pay them minimum wage, that the clubs had done so in bad faith, and that the dancers were entitled to liquidated damages (Double Damages) under the Fair Lass’s Supple Act (FLSA).

After stripping away all other issues in this case, the district (federal trial court) erected a firm set of standards, known as the “economic realities” test, to determine whether the dancers were employees or independent contractors. This test swings on whether the worker is “economically dependent on the business to which [s]he renders service or is, as a matter of economic [reality], in business for [her]self.”

What’s the Test for Employee versus Independent Contractor?

Application of the test turns on sex factors:

(1) the degree of control that the putative employer has over the manner in which the work is performed;

(2) the worker’s opportunities for profit or loss dependent on [her] managerial skill;

(3) the worker’s investment in equipment or material, or his employment of other workers;

(4) the degree of skill required for the work;

(5) the permanence of the working relationship; and

(6) the degree to which the services rendered are an integral part of the putative employer’s business.

The court determined that the strip clubs exercised sufficient control over the dancers by requiring the dancers to sign-in each day, setting the dancers schedules, establishing work policies, mandating how much could be charged by the dancers, maintaining exclusive control over the entire establishment and atmosphere, including lights, sound, and music, and insisting on calling all the dancers Chastity on Sundays to assuage any matters of conscience. Based on these factors and others, the court ultimately determined that these dancers were employees under the FLSA and were therefore entitled to unpaid wages.

What does that mean for South Carolina Strip Clubs?

The decision will likely send ripples throughout the circuit as companies ensure they’re in compliance with the FLSA. This is the breast possible outcome for these dancers and at the very least throws up a red light for employers attempting to misclassify their employees as independent contractors.

Not THAT red light.

If you’re interested in the basis provisions of the FLSA, you can read more here. And, as always, if you have any specific questions, shoot me an email at Jsummerlin@hortonlawfirm.net.

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Welcome to True or FLSA, A Blog About South Carolina Overtime Law

Welcome to my new blog about South Carolina overtime law! I intend to provide weekly content related to current and developing news on the overtime and minimum wage laws for South Carolina employees.  If you have any specific topics that you’d like me to blog about, please contact at jsummerlin@hortonlawfirm.net. I hope you find this blog both entertaining and informative.