Overtime Advisor : New York Employment Lawyer & Attorney : Greenwald Doherty Law Firm : NY Wage & Hour & Discrimination : Overtime Advisor Law Blog

Contestants might do just about anything to get a spot on the hit show American Idol, but the show’s workers do not think they should have to give up their rights to overtime and breaks just for the privilege of working on the show. Last month, former employees filed a class-action lawsuit against FremantleMedia North America, the producer of American Idol. The lawsuit alleges that the producer failed to pay overtime, falsified time cards, and did not allow the workers to take meals and rest periods as required by law. Among other things, Idol workers allege that they were paid a flat weekly rate which, after calculations taking into account their long hours, did not equal minimum wage.

The Idol workers are being backed by the Writers Guild of America and the International Brotherhood of Teamsters, which have organized a “Truth Tour” with rallies and other events to bring attention to the claims against the successful show.

Whether or not the Idol workers’ claims have merit, it is good to keep in mind that not all workers on entertainment shows or other creative endeavors will be considered exempt from the wage and hour laws. “Creative Professionals” may be exempt from federal wage and hour laws, but only if they meet certain requirements. Specifically, an employee must be compensated on a salary or fee basis of at least $455 per week, and the primary duty of the employee must be performance of work requiring “invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.” In addition, local laws also may dictate employer obligations to people working in the creative field.

The sticking point for many employers in entertainment or other creative fields is determining whether the work performed is truly creative in nature. In the Idol case, for instance, some of the plaintiffs worked in production positions. Any position that requires intelligence, diligence and accuracy – which is often involved in production work – but does not require creativity, may not be exempt from wage and hour laws. For instance, journalists that only collect and organize information and who do not contribute a unique interpretation to the information collected would not be considered to be creative professionals who are exempt. According to the U.S. Department of Labor actors, musicians, composers, soloists, certain painters, writers, certain cartoonists, essayists, novelists and high level advertising professionals generally are considered to be creative professionals who are exempt. On the other hand, an “animator” of motion picture cartoons or a retoucher of photographs would not be considered to be performing creative work and would not be exempt. As with most issues involving application of overtime laws, each situation must be assessed on a case-by-case basis to confirm that an exemption is likely to apply.

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In a recent decision, a Federal Mediation and Conciliation Service arbitrator found that the Equal Employment Opportunity Commission had consistently failed to pay many employees proper overtime wages for hours worked in excess of 40 hours per workweek.   Instead, the EEOC engaged in the often misused practice of providing compensatory time off (“comp time”) to these employees. While an exception to the FLSA permits most government agencies to offer certain non-exempt employees a choice between overtime pay and comp time, the EEOC apparently erred by failing to give employees a real choice. When it comes to interpreting the overtime rules, even the government agencies can’t seem to get it right.

In the limited situations in which employers can offer comp time to an employee in lieu of overtime pay, the employer generally must give the employee 1.5 hours of comp time for every hour of overtime worked. This practice is not legal for the vast majority of private employers, and local and state governments can offer only their non-exempt employees comp time instead of overtime pay in certain situations. Thus, both government entities and private employers who grant employees comp time often still end up having to pay employees overtime pay for the hours they work in excess of 40 in a workweek.

The confusion on this issue has resulted in numerous overtime claims [e.g., Beck v. City of Cleveland, 390 F.3d 912 (6th Cir. 2005), Heaton v. Moore, 43 F. 3d 1176 (8th Cir. 1994), Maldonado v. Administracion de Correccion, 1992 WL 301403 (D. Puerto Rico)]. Giving comp has been a common (but illegal) practice in many industries and has resulted in employees being denied substantial amounts of overtime pay. In light of current economic conditions, even more companies may be tempted to try to avoid overtime costs and giving time off may seem like an attractive alternative. Using comp time, however, is clearly not the solution.

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 As has been widely reported, a March 25, 2009 report by the U.S. Government Accountability Office (“GAO”) slammed the Wage and Hour Division (“WHD”) of the U.S. Department of Labor for inadequate response to and investigation of wage complaints. While the press coverage on this report has credited the GAO with suggesting that an employer only has 1 chance in 10 of being held accountable when an employee makes a legitimate wage complaint to the WHD, this interpretation is based on a cursory reading of the report – and this report does not tell anything like the whole story of the current state of wage and hour law enforcement in this country.   

The “1 case in 10 handled correctly” story is based on a portion of the GAO’s investigation that involved a sting operation with exactly ten bogus cases, i.e., not a particularly large sample for analysis. Moreover, these 10 fictitious complaints were brought to WHD field offices in only 6 states – Alabama, California, Florida, Maryland, Texas and Virginia. The one complaint that the GAO felt the WHD handled properly was addressed by a California field office; in another California complaint the field office investigated as required and arranged for the “employer” to pay the “employee” back wages, but the GAO judged the case to be mishandled due to recording errors in the WHD database. 

The rest of the GAO’s investigation consisted of a review of WHD files on 230 randomly-selected cases concluded between October 1, 2006 and September 30, 2007, 20 of which the GAO determined to have been inadequately investigated – thus, in this limited sample, 9 cases out of 10 apparently met the GAO’s standards. While the details of all the mishandled cases described in the report are shocking, it is hard to tell from the data the report provides how widespread poor WHD practices really were during the periods investigated.
 
There are also a couple of other important caveats to be considered: A shake-up of the WHD and the addition of 250 field investigators has already been announced by Labor Secretary Hilda Solis and the new administration has made it clear that it is serious about undertaking new workers’ rights initiatives. Also, many states, including New York, New Jersey, Connecticut and Pennsylvania, aggressively prosecute wage claims under their own wage and hour and wage payment laws. Finally, there has been a recent explosion in the number of private individual and class action lawsuits based on overtime and other wage claims. Employers certainly can’t rely on any perceived ineptness by the federal government to protect them from liability for their errors in compensating employees.

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