“Stick-Up” Overtime Class Action Suit
the Worst of the Employment Bar

Most of us would tell you that the salary basis “test” for the overtime rule is what it has been for decades: that a salaried worker who makes at least $23,660 per year is not entitled to overtime for hours worked over forty in a given work week. That’s because a proposed Department of Labor Rule, that raises that salary to $47,476, was barred from implementation by a federal court order as of November 2016: The Court said that the DOL lacked the authority to set a salary threshold or to automatically update the amount.

So the Chipotle’s restaurant chain was undoubtedly surprised when it was served June 7, 2017, with a class action (probably a “collective action”) under the Fair Labor Standards Act, by Cohen, Milstein, Sellers & Toll, PLLC in Washington. The named plaintiff alleges that she was a manager in training who regularly worked more than forty hours a week but was not paid overtime. The proposed class action, filed on behalf of Chipotle workers in New Jersey, seeks overtime pay under that proposed DOL rule. So what is the plaintiff’s theory? How can they sue under a rule that has been barred from enforcement?

Well, the plaintiff’s argument (it’s kinda technical) is that under the Administrative Procedures Act, rules that are issued for final publication with an effective date automatically go into effect unless a court issues a final adjudication vacating the rule. In other words, the argument is that the DOL doesn’t implement the rule, rather, it goes into effect on its own, and that this rule did December 1, 2016.

Now for those of you who watch Jeffrey Toobin and Alan Dershowitz on CNN (you know, the Fake News), this is the kind of argument Alan would make to which his former law student Jeffrey would roll his eyes, laugh at, and say into the camera, “That’s ridiculous.” And it is, even if it’s not.

Here’s why. The salary basis test for whether a worker should be paid overtime is not a matter that should be decided in a game of “gotcha.” Employers and their counsel should have ample notice of the date upon which this rule will go into effect, if ever. I’m no fan of abusive pay practices, and I have long counseled employers of the legal and ethical reasons to pay employees fairly and according to the rules. But that’s the point. What are the rules? Knowing what we are supposed to follow, understanding what they mean and how to implement them in the workplace is typically enough of a challenge not to have creative arguments suggesting that a clock has automatically started before anyone believed it had. This too is a question of fairness, of notice.

I hope the court will dismiss this lawsuit. But that a law firm no doubt staffed by able, creative thinkers believed this was the right claim to make is disappointing. There aren’t good public policies advanced here. It isn’t unfair that these workers have not been paid overtime, because Chipotles was not under the belief they were legally obligated to pay them overtime. Whether the salary threshold ought to be the higher salary is a decent argument. Whether the rule has gone into effect yet just isn’t. Everybody put your hands in the air! This is a robbery. And it’s not the law, y’all. At least not yet.

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The author, Peter Rutledge, is an Employment Lawyer and Partner at Rutledge Law, Greenville, SC. You can contact him via these channels:
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The salary basis test for whether a worker should be paid overtime is not a matter that should be decided in a game of “gotcha.”
–Peter Rutledge, Rutledge Law