The Overtime Lawsuit Conundrum

Michael Orey - BusinessWeek Management IQ Blog
April 14, 2009

A recent ruling in an overtime lawsuit against J.P. Morgan Chase highlights a conundrum for companies: Corrective action they take to bring themselves into compliance with so-called wage and hour laws can land the company in litigation. Wage and hour claims have proliferated around the country in recent years and have literally cost companies billions. In early 2008, Chase, on its own initiative, reclassified a group of tech-support workers as “non-exempt”, entitling them to overtime pay if they work more than 40 hours in a week. In March 2008, several workers filed a class-action suit, seeking overtime pay going back several years. In their complaint, the workers say they “regularly worked far in excess of forty hours per week.” Under federal law, employers often have to pay double damages in such cases.

On April 10, U.S. Magistrate Judge Debra Freeman issued an order that itself is not of great import, but does shed light on how bedeviling these situations can be for companies. Judge Freeman ruled that Chase may not be able to keep an internal e-mail out of the case. The e-mail, sent Dec. 3, 2007, recommends that certain IT jobs be reclassified to make the workers eligible for overtime. That makes nice evidence for the plaintiffs of Chase’s knowledge that its workers needed to be reclassified. And it shows that the company treated these workers as a group, important to letting the case proceed as a class.

Adam T. Klein, an attorney at Outten & Golden in New York, which represents the workers in the Chase lawsuit, acknowledges that companies are in a tricky spot in these situations. “A lot of companies that deal with this face a lawsuit or a knock on the door from the Department of Labor,” he says. J.P. Morgan Chase has not yet responded with comment.