Lady Gaga’s Personal Assistant Sues: A Reminder of Wage and Hour Law Obligations

February 7, 2012 in Uncategorized by mross | No comments

Lady Gaga’s lawsuit has recently received a lot of attention from entertainment news, as her former personal assistant is claiming she has been denied hundreds of thousands of dollars in overtime pay. In addition to bringing public attention details of Ms. Gaga’s personal life, her personal assistant’s claim may also have actual merit under both the Federal Fair Labor Standards Act (FLSA) and New York state law.

 

Jennifer O’Neill worked for Lady Gaga (whose proper name is Stefani Germanotta) for a mere thirteen months and an annual salary of $75,000. Despite this seemingly adequate salary, she claims she was not compensated for overtime and did not qualify for the “administrative exception” to overtime laws. Ms. O’Neil was allegedly on duty around the clock and often forgoing meals and sleep to be at Lady Gaga’s beck and call, she claims she was figuratively (and often literally) by her side at all times of the day with little respite. She is therefore seeking $380,000 in back overtime compensation for the 7,168 hours of overtime for which she allegedly worked and was not compensated.

 

These types of labor disputes often get attention for the celebrity involved, but are also useful as a learning tool for non-Gaga fans who wish to protect themselves from similar lawsuits (one does not have to be a beloved pop icon to be sued for compensation oversight.) There are two issues in this case. First, it is important to understand which employees may be exempt from overtime, and in her case, which are not. Under the U.S. Department of Labor regulations, creative workers, computer workers, executives, and professionals—none of which seem to accurately describe the work of Jennifer O’Neill—can be exempt from overtime. Administrative assistants or employees performing non-manual work—a category which might cover Ms. O’Neill’s line of work— may also be exempt from overtime if they satisfy all of the following:

• The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;

• The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and

• The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

In Lady Gaga’s case, Jennifer O’Neill may satisfy the first two criteria above, but is claiming she did not exercise sufficient independent discretion, therefore qualifying her for exemption. The Department of Regulation defines discretion and independent judgment is:

“The employee has authority to make an independent choice, free from immediate direction or supervision. Factors to consider include, but are not limited to: whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices; whether the employee carries out major assignments in conducting the operations of the business; whether the employee performs work that affects business operations to a substantial degree; whether the employee has authority to commit the employer in matters that have significant financial impact; whether the employee has authority to waive or deviate from established policies and procedures without prior approval, and other factors set forth in the regulation.”

 

The second issue is on-call employment, because even if Lady Gaga did not need Ms. O’Neill, it is alleged that she wasn’t allowed to be very far from the singer. If an employer does not wish to pay overtime for a non-exempt employee on-call, the employee’s tasks cannot unduly restrict the employee’s ability to spend his or her time away from the job. For example, if the non-exempt employees cannot go home or leave the work premises, or must remain within such a close distant that they cannot effectively use their free time, they will have to be compensated overtime.

Labor Law can be complex and time will tell how the courts decide to define her as Lady Gaga’s personal assistant. In order to avoid paying overtime or facing an expensive lawsuit such as Lady Gaga’s, it is important to understand which of your employees are exempt and which are not exempt from overtime pay based on federal labor laws, and this includes understanding how their job descriptions are defined by the law as well. Even if the employee is not working, his own personal leisure activities need to be relatively unhindered. If not, those hours worked may count towards their total weekly work hours. For questions regarding labor law, contact Phil Mortensen at pmortensen@bartonesq.com.

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Boeing’s Labor Woes: The NLRB Charges Firm with Illegal Retaliation against Unionized Workers

June 24, 2011 in Uncategorized by pmortensen | No comments

On Friday, June 17th, Boeing officially opened its new billion-dollar plant in South Carolina.  The facility was built to ramp up production for the much-delayed 787 Dreamliner aircraft.  Although workers in South Carolina are thrilled with the addition of 1,000 new jobs, the expansion has stirred controversy.  The IAM, the labor union representing 25,000 Boeing employees, has accused the company of illegally retaliating against its members by expanding operations in South Carolina rather than at its existing facilities in Washington. 

In recent years, labor relations between Boeing and its Washington employees have been troubled.  The unionized workers have participated in three strikes since 1995 which have cost the company billions and contributed to production delays.  It appears that Boeing was motivated to expand into South Carolina to avoid potential delays that could result from labor strife.

The National Labor Relations Board (NLRB) viewed the expansion as illegal retaliation for past strikes and issued a complaint against the company.  Hearings began on June 14th.  The NLRB’s complaint charged Boeing with unfair labor practices under the National Labor Relations Act.  Specifically, Boeing was accused of coercive practices that interfere with its employees’ right to organize and bargain collectively and of discouraging union membership through discriminatory hiring practices. The complaint seeks to have Boeing operate its second production line for the 787 in Washington.

The NLRB cites a number of statements made by Boeing executives as evidence of coercion:

(i)                 In October, 2009 at a quarterly earnings conference call, Boeing’s CEO discussed “diversifying [Boeing’s] labor pool and labor relationship” and expanding production into South Carolina because of “strikes happening every three to four years in Puget Sound.”

(ii)               An October 2009 memorandum informed employees that its decision to open its second production line in South Carolina was based upon a desire to reduce delivery disruptions caused by work stoppages.

(iii)             A December 2009 statement by a Boeing executive, appearing in two news articles, indicated that Boeing wished to contract with separate suppliers in South Carolina and use a “dual-sourcing” system because of past strikes.

(iv)             A March 2010 statement by a Boeing executive, made during an interview, indicated that the motivation to expand into South Carolina “was not the business climate and it’s not the wages we’re paying people today.  It was that we can’t afford to have a work stoppage every three years.”

            Prominent Republicans, pro-business groups, and Boeing’s attorneys have forcefully decried what they consider an unwarranted and unprecedented imposition of government regulation.  They point out that the NLRB has not identified any injuries suffered by the unionized employees—in fact Boeing has added thousands of jobs at its Washington facilities. Additionally, the fate of Boeing’s large investment in South Carolina, and the associated jobs, are now potentially up in the air.  Union leaders retort that Boeing’s actions and statements are nonetheless coercive, retaliatory, and illegal.

If you would like to know more about this posting, please contact Phil Mortensen of Barton Barton & Plotkin LLP for additional information.

Employers Beware! Are Your Independent Contractors Really Employees?

April 26, 2011 in Uncategorized by pmortensen | No comments

The media have been having a hay day with the efforts of various governors around the country to reign in years of executive neglect that resulted in outsized state employee wages and benefits packages.  The governors in Wisconsin, Ohio, New Jersey and Indiana, to name a few, have asked their state workers unions for concessions as a means to help balance state budgets.  In Wisconsin, the governor and legislature have gone so far as modify state law to severely limit the collective bargaining rights that state employees have enjoyed for years.  Further, in the government’s quest for more revenue, many employers are also being targeted, i.e. scrutinized for misclassifying their employees as independent contractors.

The inclination or temptation to classify workers as independent contractors should be rather obvious: employers can save millions of dollars on payroll taxes (e.g., unemployment compensation, workers compensation, social security, etc.), overtime and other relevant payments that are made to or on behalf of employees.  Many employers mistakenly believe that, so long as the workers are classified as “independent contractors”, they (the employers) have insulated themselves from these financial obligations.  Unfortunately, nothing could be further from the truth.  And, if the employer is wrong, not only will it be liable for back-wages and interest, depending on the state there may also be both criminal and civil penalties involved.  Further, depending on the law involved, the back-pay can go back two to three years.

State departments of labor will disregard a mere “independent contractor” classifications and consider a variety of substantive factors to determine how to classify a worker.  Among the variety of factors, the test typically hinges on the scope of control an employer exercises over the worker and the ability of the worker to generate a profit or possibly suffer a loss from the venture.

Even more daunting, the Internal Revenue Service is also aggressive in investigating worker classifications.  A few years ago, the IRS declared that the drug program agents of the National Football League – those people who take urine samples of the players – were actually employees and not independent contractors as the League had classified them.  The potential liability of the NFL was in the tens of millions.   The IRS has issued a revenue ruling identifying twenty (20) factors indicative of sufficient control by an employer to warrant a finding that an independent contractor is really an employee.  See Rev. Rul. 87-41 (Jan. 1987).  Among those are: instructions and training given by the employer as to how the work should be performed; integration of the worker into the employer’s workforce; setting the hours of work by the employer; the method of payment; the employer’s payment of expenses incurred by the worker; whether the worker has an opportunity for the realization of profit or loss; whether the worker works for more than one employer at a time.

It is the wise employer who takes the preventative steps now to assure that his workers are properly classified.  If after conducting an internal audit the employer finds that it has been in error, appropriate adjustments can be made (e.g., reclassifying the worker as an employee or modifying the relationship with the worker to better demonstrate independent contractor status), and potential liability limited as time passes.

If you would like to know more about this posting, please contact Phil Mortensen of Barton Barton & Plotkin LLP for additional information.