Battling Over Overtime

There were years, Omar Belazi says, when he willingly logged 65-hour weeks, stayed late to vacuum the store's floor and clean the bathroom, and surrendered his Sundays to hit sales targets.

But a decade later he grew tired of waiting for the payback.

"It gets to be very stressful, very tiring. You just get up and go to RadioShack and go home and go to sleep," said Belazi, a former store manager for the electronics chain in Santa Barbara, Calif. "They gave me all these awards, but it didn't do me any good. They didn't pay me."

A growing number of workers like Belazi are demanding more from their employers. The result: a flood of lawsuits by employees, many in arguably "professional" jobs, who accuse their companies of cheating them out of overtime pay.

The surge in claims - some resulting in multimillion-dollar settlements - is part of an intensifying debate over overtime pay and who is entitled to it.

In part, the debate reflects the fact that Americans are working more hours - longer than their counterparts in every other industrialized country - and that employers are trying to stretch productivity. But it also hinges on changes in the jobs people do and what those jobs are called.

With manufacturing jobs dwindling, more workers now toil for service-industry employers who pay salaries and give people hard-to-define titles like "analyst," "manager" and "administrator."

Federal law says employers do not have to pay overtime to salaried workers in executive, administrative or professional jobs. But the law, the Fair Labor Standards Act, has undergone only limited revision since the 1970s. It relies on some outdated salary figures and terminology that leaves room for broad interpretation.

And employers and employees have had some very different ideas about what is a professional and what constitutes fair pay.

RadioShack agreed in July to pay $29.9 million to settle a lawsuit led by Belazi on behalf of 1,300 current and former California store managers. The workers contended they were owed overtime because the company made virtually all managerial decisions at higher levels, and mandated that they spend most of their hours as salesmen.

The payment by RadioShack is the most recent in a series of very large settlements in California, which has a law that grants overtime pay to a broader group of workers than federal law does.

This spring, Starbucks agreed to pay a group of California store managers $18 million to settle an overtime lawsuit. SBC Pacific Bell agreed last December to pay some engineers $35 million.

"It's become the cause of action du jour in California," said Mark Hill, senior vice president and general counsel for RadioShack, which has denied any wrongdoing and notes that its store managers' average pay is $60,000 a year. "These are not underpaid hourly workers who are being mischaracterized as salaried workers simply so an employer would not have to pay for long hours worked."

Elsewhere, drugstore chain Eckerd Corp. paid $8 million last year to settle a lawsuit brought by two former pharmacists at a store in Moss Bluff, La., on behalf of nearly 1,100 others. The lawsuit accused Eckerd of docking the druggists' supposedly fixed salary if they worked less than 40 hours. But the company would not pay them more when they worked beyond their scheduled shifts, the workers said.

"How can you tell me I'm a salaried employee if I have to sign a timesheet?" said Kevin Soileau of Florien, La., one of the pharmacists who sued.

Eckerd denied any wrongdoing and said it settled merely to avoid the expense of a drawn-out court battle.

Wal-Mart Stores Inc. is fighting 38 state and federal lawsuits filed by hourly workers in 30 states, accusing the company of systematically forcing them to work long hours off the clock. Wal-Mart settled another such case in Colorado two years ago - reportedly for $50 million, though the company will say only that the actual amount is far less than that.

"The instances alleged are isolated and infrequent and we have a policy that allows us to pay hundreds of thousands of associates properly every day," Wal-Mart spokesman Bill Wertz said.

Labor advocates and lawyers for workers say they are protecting employees from persistent attempts by employers to skirt the laws on overtime.

But employers argue that outdated labor laws have become a weapon for attorneys to win undeserved overtime pay for already highly paid employees.

The law "was put in place to make sure workers at the low end of the pay scale are paid a fair day's wage for a fair day's pay, and it's gotten away from that," said Timothy Bartl of the Labor Policy Association, which lobbies on behalf of corporate personnel officers.

Employers may soon get some of what they are after. The Labor Department is pledging to update regulations to clarify which workers are covered by the law and focus its protection on those in low-wage jobs.

Some white-collar workers say they deserve protection as much as their lower-paid counterparts do.

"The law doesn't say that this is only for people making $12 an hour but not if you're making $35 an hour," Soileau said.

By Adam Geller
By Adam Geller