A lawsuit stemming from a single worker’s complaint two years ago in Rochester could turn into a potential liability of more than $100 million for Lowe’s Cos. Inc. Partners of Dolin, Thomas & Solomon LLP, a six-attorney employment law boutique in Rochester, hope the case also will put their firm on the map nationally.
The lawsuit, filed in U.S. District Court in Rochester in 2003, accuses Lowe’s of wrongly withholding overtime pay from sales associates. A Kansas federal judge’s ruling in a similar case this month certified the Lowe’s workers’ claim as a national class action.
Currently 1,400 Lowe’s workers are involved in the New York case and another 100 to 200 are signed on to the Kansas action, Dolin, Thomas partner Nelson Thomas said. The local law firm is assisting in the Kansas case, which is proceeding separately.
The Lowe’s suit is not Dolin, Thomas’ first national class action, but it is the largest the firm has undertaken and one of the largest employment class actions filed nationally, partner Patrick Solomon said.
“It’s not Vioxx,” Solomon said, referring to class action medical claims filed against Merck & Co. Inc. that might total in the billions of dollars.
But in terms of dollars and number of plaintiffs, the Lowe’s suit promises to be one of the larger employment class action claims nationally, he said. One sign that the case is attracting attention: It currently is the first link listed in the suits-filed section of lawyersandsettlements.com, an information exchange Web site for class action and personal injury lawyers.
District Judge Carlos Murguia’s ruling in the Kansas case, handed down Sept. 1, makes some 75,000 current and former employees of the national home improvement chain eligible to join the action, Thomas said.
The 75,000 figure is based on information Lowe’s provided in discovery proceedings in the Kansas suit. It could be a conservative number, Thomas believes.
Murguia’s ruling allows attorneys for the plaintiffs to send all current Lowe’s workers notices telling them they could be eligible to collect damage awards. Such notices would direct workers to a Dolin, Thomas informational Web site stating details of the case and providing a downloadable application form for potential plaintiffs.
Workers who left Lowe’s employ in the last three years also could be eligible to join, Thomas said. In some states, eligibility could stretch back longer. In New York, workers who left the firm’s employ six years ago can join.
If the actions succeed, Thomas said, each worker signed on as a plaintiff would collect a minimum of $100 for each week worked over the past one or two years. Interest and attorneys’ fees would be added to workers’ awards. Employees who earned bonuses and some other extra payments would receive more.
Plaintiffs in both actions fault Lowe’s for using a system of overtime pay in which workers are paid half their hourly rate for hours worked over 40 in any given week instead of time and a half.
That system is legal in certain circumstances, Thomas said, but Lowe’s applies it wrongly. The half-time system is supposed be available to companies whose employees work fluctuating workweeks and are guaranteed a minimum weekly amount, he said.
Under the system, for example, a $10 an hour employee who works 35 hours in one week and 48 hours in the next week would be paid $400 for the short week, getting $50 unearned dollars. The same worker would get a $440 pay envelope for the longer week, making his average hourly wage for the two-week $10.10.
However, if the employee were paid only for 35 hours in the first week but then received time and a half for the eight hours of overtime in the second week, his average hourly wage for the two-week period would be $10.50.
Lowe’s sales associates, whom Lowe’s calls specialists, put in 48-hour weeks as a rule, Thomas said. They are paid $12 for each hour up to 40 but get only $6 for each hour worked over 40. By wrongly applying the fluctuating-hour system to workers who put in standard-hour workweeks, Thomas maintained, Lowe’s created a system in which employees who put in extra time actually cut their hourly rates.
Lowe’s also improperly deducted amounts from employees’ paychecks, the workers’ suit alleges.
“Lowe’s believes these class actions are without merit and we are comfortable with our position,” said Jennifer Smith, a spokeswoman for the company.
Suits alleging overtime violations by employers rose dramatically four to five years ago, posing risks for employers and creating “a gold mine” for plaintiffs, a 2002 article in Lawyers Weekly USA noted.
A “boom” in such employment cases was occurring because arcane provisions of federal and states’ employment laws are poorly understood by employers, and those who willfully violate overtime rules had been lulled into a false sense of security by indifferent enforcement, Lawyers Weekly said. Widespread downsizings were motivating laid-off workers to seek legal advice, however, leaving more employers exposed.
Changes enacted in federal overtime rules last year left many of the provisions referred to in the 2002 article intact, Dolin, Thomas’ Solomon said. Federal filings have continued to rise. Discrimination claims, which once accounted for the vast majority of employment actions, have leveled off, making overtime claims the fastest-growing area of employment law.
“I don’t see that slowing down,” Solomon said. “Every person that comes in, we feel we have to ask them about (possible overtime violations). It’s like a doctor taking your pulse.”
Thomas first filed the Lowe’s suit on behalf of Thomas Bernhardi, a former Rochester-area Lowe’s worker whom the chain had terminated. Like many fired workers, Bernhardi considered his termination unfair and hoped to sue the company for discrimination, Thomas said. And like many workers who hope to file such claims, he learned that employers are not legally required to be fair and that federal anti-discrimination laws apply to fairly limited circumstances-age, sex and race or ethnicity.
State and federal labor laws covering overtime pay are less familiar to workers and often not that well understood by employers, Thomas said. Bernhardi felt there was something perhaps not right about Lowe’s pay policies. But that was not his initial area of concern. Investigation of the home improvement chain’s overtime policies convinced Thomas there were grounds for an overtime suit.
The Lowe’s case is one of several alleging overtime-pay violations Dolin, Thomas currently is pursuing. Also targeted in suits filed in federal court here by the employment law firm for slightly different alleged overtime violations are J.P. Morgan Chase & Co. and Dick’s Sporting Goods Inc.
In the Dick’s case, filed earlier this year, employees allege that the sporting goods chain improperly calculated hours, deducting time that employees actually worked. Chase workers claimed in a 2001 complaint that the bank improperly classified them as exempt from overtime regulations.
Thomas declined to speak about the pending cases. Dolin, Thomas is seeking class action status in the Chase and Dick’s cases, but so far has not attained it.
In class actions, damage awards can continue to grow for years because plaintiffs are able to keep signing on after a ruling comes down. Generally, judges set a cutoff date by which plaintiffs must file claims. Such dates usually fall several years after a decision is handed down.
No judge has ruled on the validity of workers’ claims in the Lowe’s cases here or in Kansas. Thomas expects to file a summary judgment motion in the Rochester case shortly. A countermotion by Lowe’s seeking dismissal could follow.
Judge David Larimer could find for either side’s summary judgment motion or could send the case to trial.
The Kansas plaintiffs are still seeking information from Lowe’s in discovery, court records show.
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09/30/05 (C) Rochester Business Journal