Overtime Exemption Misclassification
Another case of a very common problem; an employee is given the title of Assistant Manager or some similar “managerial” job title and classified as exempt from the overtime laws (meaning they are not paid overtime), but their duties and responsibilities do not involve any meaningful decision-making authority or supervision of other employees, or their compensation method fails to meet the minimum requirements under federal or state overtime law. The issue of misclassification of non-exempt employees as exempt employees to avoid paying overtime occurs in all types of industries, but has been particularly problematic for workers in the banking and financial services arena.
A Case of Overtime Exemption Misclassification at JPMorgan Chase
In this recent case, JPMorgan Chase has agreed to a proposed settlement that would pay a group of Assistant Branch Managers from at least 9 states over $16 million to settle claims that the bank misclassified them as overtime-exempt employees. The case includes claims under the Fair Labor Standards Act (federal overtime law), as well as violations of New York, Connecticut and Illinois state overtime labor laws. While the settlement is still subject to review and approval by a New York federal judge, it illustrates the size and scope of this ongoing issue that costs workers from across the country full and fair payment for the overtime hours they work.
This is by no means the only class or collective action overtime pay lawsuit settled by JPMorgan in recent years. Settlements in recent years include: $12 million paid to a class of bankers, tellers and other hourly workers in 12 states, and $42 million to a class of loan processors. Numerous other banks and financial institutions have also faced (and settled) overtime class or collective actions in recent years in which they were alleged to have misclassified workers ranging from tellers to financial advisors as being exempt from the FLSA’s overtime pay provisions.
Why Do These Exemption Misclassifications Happen?
From the outside, many wonder how and why some of the largest, richest and most sophisticated companies fail to properly classify thousands of their employees – even after repeated lawsuits and multi-million dollar settlements. While there is not one answer, the primary motive is almost always an aggressive approach to cutting labor costs by reducing and/or eliminating overtime pay, and at the same time, demanding more work hours out of employees.
Because employers know that the odds are good that they will get away with short-changing workers for years, or even decades, before being caught, many are willing to take the risk because the “reward” (cost savings) is so high and the timeframe for recoveries are relatively short (2-3 years in most cases). Even if they are eventually made to pay, the exposure will only be a small fraction of the wages they avoided paying over many years – so the company ends up ahead, with higher profits, all at the expense of its workers who trusted that they were being paid fairly and in accordance with federal and state overtime pay laws.
For more information on state and federal labor laws governing payment of overtime wages, contact us or submit your information using our convenient Case Evaluation form for a FREE and CONFIDENTIAL review of your circumstances.
