Vision Payroll

July 10, 2011

Farmers Insurance Agrees to Pay $1.5 Million in Back Wages

Farmers Insurance Agrees to Pay $1.5 Million in Back Wages
Farmers Insurance Agrees to Pay $1.5 Million in Back Wages
Los Angeles-based Farmers Insurance Inc. (Farmers) has agreed to pay $1,520,705 in overtime back wages to 3,459 employees following an investigation by the US Department of Labor’s Wage and Hour Division that disclosed significant and systemic violations of the federal Fair Labor Standards Act’s (FLSA) overtime and record-keeping provisions. Violations occurred at 11 customer service call centers located in Florida, Kansas, Michigan, Oklahoma, Oregon and Texas.

Pre-Shift and Post-Shift Work Must Be Compensated

“Failing to properly compensate employees for pre- or post-shift work is a violation of federal law,” said Secretary of Labor Hilda L. Solis. “The Labor Department is committed to ensuring that employers abide by the law so that workers are protected against exploitation, and law-abiding employers are not placed at a competitive disadvantage.”

Farmers Did Not Pay for Pre-Shift Work

Through interviews with employees and a review of the company’s timekeeping and payroll systems, investigators found that the company did not account for time employees spent performing pre-shift work activities. Employees routinely performed an average of thirty minutes of unrecorded and uncompensated work — such as turning on work stations, logging into the company phone system and initiating certain software applications necessary to begin their call center duties — per week.

Farmers Agrees to Maintain Future Compliance with FLSA

Because employees’ pre-shift work times were excluded from official time and payroll records, they were not paid for all hours and are owed compensation at time and one-half their regular rates for hours that exceeded forty per week. Farmers Insurance has agreed to pay back wages, as well as to maintain future compliance with the FLSA by properly recording and compensating all hours worked by its employees.

Call Center Employees Across the Country Are Affected

The agreement affects call center employees who worked between Jan. 1, 2009, and May 10, 2010, at Farmers’ HelpPoint facilities in Olathe, Kansas; Oklahoma City, Oklahoma; Lake Mary, Florida; and Grand Rapids, Michigan. It also affects workers employed at a former location in Overland Park, Kansas, between Jan. 1, 2009, and Jan. 10, 2010. Additionally, it affects employees who worked between Jan. 1, 2009, and Feb. 1, 2010, at Farmers’ ServicePoint and commercial facilities in Austin, Texas; a ServicePoint facility in Grand Rapids, Michigan; a ServicePoint facility in Olathe, Kansas; and ServicePoint and commercial facilities in Hillsboro, Oregon.

FLSA Also Requires Overtime for Hours Worked in Excess of 40

The FLSA requires that covered employees be paid for pre-shift and post-shift job duties, and for attending required meetings. Employees must be paid time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond forty per week. Employers must pay at least the federal minimum wage of $7.25 for all hours worked, and maintain accurate time and payroll records.

June 28, 2010

Department of Labor Rules That Mooning of Co-Worker Is Not Gross Misconduct

The US Department of Labor (DOL) Employee Benefits Security Adminstration (EBSA) has ruled in a determination letter that the mooning of a co-worker is not gross misconduct that would disqualify an individual from receiving COBRA premium assistance under the American Recovery and Reinvestment Act of 2009 (ARRA). The ruling came to light when the employer in the case, Stormont-Vail Health Care, Inc. (Stormont-Vail), requested a temporary restraining order (TRO) staying the final determination letter. In Stormont-Vail Health Care, Inc. v. US Department of Labor EBSA, DCKS, 10cv4052-RDR, 5/27/2010, the court denied the motion for the TRO.

According to the court, Jennifer Reavis (Reavis) was employed by Stormont-Vail as a nurse. Stormont-Vail received a report that “Reavis told [a male nurse] to answer some patient call lights, that he assertively told her ‘no, I’m busy,’ and that in response Reavis bent over with her scrub pants pulled down, exposing her rear end.” In response, “Reavis has claimed that she was responding to a provocative finger gesture and that she only partially exposed her backside to the male nurse.” Stormont-Vail fired Reavis and disallowed her claim for COBRA premium assistance under ARRA. Reavis filed an appeal with the Department of Labor, which ruled that Reavis did qualify for the premium assistance.

Due to the clear lack of standards to determine gross misconduct for COBRA and ARRA purposes, Vision Payroll strongly recommends that employers consult with a competent labor law attorney for assistance in deciding if ARRA premium assistance should be denied because of gross misconduct.

June 26, 2010

Twelve Lawsuits Alleging FLSA Violations by Bank of America to Be Centralized in Kansas

Twelve separate lawsuits from California, Florida, Kansas, Texas, and Washington, all of which allege that Bank of America (either Bank of America, NA or Bank of America Corp.) “routinely fails to pay its employees for off-the-clock overtime work in violation of the Fair Labor Standards Act [FLSA] and/or state law”, have been moved to the District of Kansas for coordinated or consolidated pretrial proceedings by the United States Judicial Panel on Multidistrict Litigation (the Panel). One of the cases “seeks to certify a class of all Bank of America non-exempt employees in the United States” for a class action suit against Bank of America.

The Panel considered not moving some of the cases. Some cases were moved even though the allegations were related to specific jobs, because the allegations were similar to those in other cases, “including allegations that Bank of America systematically prohibits overtime eligible employees from accurately recording their time and, as a result, does not pay its employees for all hours worked, including overtime pay.” Others considered similar “allege that that the timekeeping system used by Bank of America allows managers to modify or decrease the time recorded, and time worked is regularly deleted to avoid paying overtime.” Some cases moved included unrelated allegations, “such as discrimination (the Zhou action), retaliation, defamation and violation of the Family and Medical Leave Act (the Carrero action).” The Panel felt that any differences were not significant enough to outweigh the benefits of moving the cases for coordinated or consolidated pretrial proceedings.

The Panel recommended that, with the consent of the District of Kansas, the coordinated or consolidated pretrial proceedings be assigned to the Honorable John W. Lungstrum, who “has the experience, energy and time to handle this litigation efficiently.”

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