How to Prevent Lawsuits due to Misclassification of Workers and Overtime Pay Issues - Research Paper Example

Rite Aid Overtime Lawsuit In a lawsuit that involved overtime and mis ification of workers, Rite Aid incurred an amount of money that was above 20 million dollars. This followed their failure to make considerations for the needs of the employees who worked for them past their normal time without compensation. In the lawsuit, 14 cases involved misclassification of 6,100 salaried employees who never received their right pay from the organization for which they worked devotedly. In that lawsuit, the court ordered Rite Aid Corporation to pay its workers the $20.9 million that it owed them as a result of misclassifying them in the job, working for extra hours without compensation and many more issues. According to the federal wage and hour laws, all non-exempted employees are entitled to a minimum wage and overtime wage for all the hours they the work beyond the stipulated 4o hours a week, unless there are exemptions. In this respect, the exemptions mean that a person falls under the category of a salaried employee and should be treated according to the others that are employed on permanent bases. In their misclassification, Rite Aid categorized its assistant managers as salary white collar exempts who did not receive who could work like any other employees in the company and their title was not anything. The situation of assistant managers working as exempts prevailed for some time until they decided to challenge the model of working of the company and filed a case against it. This followed the realization that they deserved a minimum pay wage and the pay for extra hours they worked for Rite Aid Corporation without compensation. According to the federal wage and hour laws, Rite Aid ought to pay those employees three times the money they ought to have paid them if the company treated them as exempt workers. The cases proceeded until on January 10th, 2013, Rite Aid announced that it has accepted to give $20.9 million in payment to misclassified workers who had worked for extra hours without payment and without receiving any favor from the company. Rite Aid is a drugstore chain that capitalizes on sale and distribution of drugs in the US and other parts of the world and has a broad market to through its large base in the market. Having started it operations as a private company in 1962 with the name Thrif D Discount Center, the company underwent growth and expansion to adopt its current name first in 1968 and it became public enterprise. Since its establishment as public company, it has thrived in different conditions and surviving in difficult economic stresses and emerging as a top company in different situations. The company is the largest drugstore chain on the East Coast and the third largest in US and is also among the category of fortune 500 companies that have performed well and are the largest in the world and it continues to expand. Rite Aid Corporation has its headquarters in East Pennsboro in Pennsylvania and it distributes its drugs to different states within America and offer health services. This is a shift from its original location in Scranton in Pennsylvania where the company was established and based its operation in 1962 as health and beauty store, which had no part for pharmacy. With time, the company expanded to include a pharmacy in its operations and developed to a great chain store, which by the end of the first three years had expanded to five different states in the northeast of Pennsylvania. The company entered the America Stock Market in 1968 and in 1970, it entered to the New York Stock Market as a large public company and in those times, it had a lot of potential to grow and reach many places. Through its gradual development, the company was the 100th in the Fortune 500 companies in 2011, which indicates that it has maintained its growth overtime since its establishment. To enhance its growth and make its operations effective, the company went into joint venture with another market and made to enhance its market control and to increase its competitive advantage. In the 2006, Rite Aid announced that it would buy Eckerd and Brook pharmacy stores from Quebec and merge them into one large chain store that would have great competitive advantage in the market. This resulted in a great expansion of Rite Aid Corporation to become large in size and provision of services in the different states in America. For that reason, Rite Aid was undoubtedly one of the largest health service providers in America and the greatest in its region of operation where it dominated the market. In the past, Rite Aid Corporation has experienced several disputes concerning wage and work hour disputes as well as those issues related to the misclassification and that led to increased trouble with the employees within the organization. For once, Rite Aid employees engaged the company in a lawsuit where they raised some concerns about their misclassification of some people who had titles as assistant managers but never worked as exempt workers and never got compensation from the corporation for extra hours they worked. What Rite Aid Corporation classified as exemptions were un-functional titles that they gave to some employees but who performed similar work with others without them and for similar length of time. In the case of their classifications, some people who bore the title of assistant managers did not do anything unique from what other did and this enraged them because although exempted, they had no privileges they could enjoy better than the non-exempted. This meant that the assistant managers worked for long hours without receiving either the minimum wage or the overtime wage, which they deserved to receive as non-exempted employees. This contravened their rights and drove them to file cases in court to ensure challenge the position of Rite Aid and use the justification of the federal wage and hour laws to have them receive their due amount. This made the Rite Aid Company to learn from their mistakes to implement a system of classification and payment that could match the legal stipulation and ensure the right treatment for all its employees (Montana Legislative Services par. 1). The discourse of the issue of misclassification and lack of payment for extra hours to the assistant managers worked as non-exempted but categorized salaried, revolved around two perspective of one law which the two parties based their arguments. On one hand, the employees cited the federal wage and hour laws and on the other hand, the Rite Aid Corporation argued on the bases of Fair Labor Standard Act (FLSA), which they quoted to defend their course of action in not paying the assistant managers their overtime hour dues. In the cases, the employees argued that the stipulations of the Federal wage and hour laws provided that if an employee works for more than 40 hours in a week, he is entitled to a minimum wage and payment for the extra hours. This is unless when an employee is exempted in which case he or she would work for more than 40 hours because they will be treated as salaried and will receive a minimum wage of at least $455 per week regardless of the number of hours they work (Montana Legislative Services par. 1). This would give the salaried employees some privileges that the non-exempted cannot access and who should work for not more or less than 40 hours in a week (United States Court of Appeal 19). In the argument, Rite Aid Corporation argued on the bases of the FLSA by first arguing that the assistant managers were exempted employees according to their terms of service in the company. Basing their arguments on FLSA, Rite Aid Corporation argued that the assistant managers did not fall under the FSLA which stipulated the various provisions that could guarantee them to receive overtime payment. According to Rite Aid Corporation, the FLSA provides that only the non-exempted employees should receive wages for extra hours worked within a week and not the salaried, which the assistant mangers were (United States Court of Appeal 26). In their argument, the employees argued that although they had such titles, their duties did not differ from those non-exempted who were entitled to receive extra wages for hours they worked beyond 40 per week. These employees also argued that Rite Aid Corporation had just manipulated them through change of their title so that they could avoid paying for them the extra hours they worked. They argued there ought to be a clear difference between the exempted and those who are not so that their duties can be distinguishable and outsiders can elaborate them when they make observation. On the other hand, while basing their arguments on the FSLA, Rite Aid Corporation argued that exemptions from the overtime were on the bases of the usual job duties of an employee as opposed to the title of a person. They argued that misinterpretation of the act led to the misunderstanding between them and its employees because while they exempted them in terms of the duties they performed to the company, the employees based their argument on the titles they had. The cases turned out to go around the bases of exemptions because while the Rite Aid Corporation employees based their argument on the title they held, the corporation argued its case on the bases of the duties each of the employees should perform (United States, Employment Standards Administration and Wage and Hour Division 27). However, even with the Rite Aid Corporation refuting the argument of the employees, it lost the case and hence, the court ordered them to pay the employees $20.9 million which they announced compliance on January 10th, 2013. As a recommendation, Rite Aid Corporation will need to come up with a clear job description for each of its positions so that it can minimize any chance of argument on the bases of the different requirement. This issue will ensure that the company is in a position to categorize different employees and what they can do and the length time they should work to attain their goals. In relation to developing a clear job description, people will know the duties they will do as holders of a specific title in the company as opposed to the claims raised by the employees of the company. In their job description notice, there should be no two different roles that have different names but serving the same purposes. One of the problems of this strategy of reducing the conflict is that some employee will refuse to take up some simple roles just because they are not part of their job description. Another way to solve the problem of misclassification is that the issues payment of overtime, the company will need to come up with a clear framework to determine the various terms under which any employee will be working for the company. In this framework, the company will determine all the provisions for a person who is employed on permanent bases and therefore exempted and those who are to work as temporary and therefore, non-exempted. The terms of employment will help to distinguish all the factors that determine the services delivery by different employees and will ensure that the employees have an expectation on what would happen at the end of their services. With such terms, no one will expect or will demand more than what the terms of employment provides for them. To enable clear understanding and proper compliance to the law, Rite Aid Corporation will need to have a legal advisor that will guide them in compliance to the state law and to their policies. This will ensure that the company will not fail in engaging different people to work with it and the legal officer will help to assess the risk of anything into which the corporation will venture. In the case of misclassification witnessed in the past, the legal officer would have warned the management of the legal implication it risked on the side of the company and that of its employees. A legal officer will also help to link the policies of Rite Aid Corporation to the federal laws and other acts that are a necessity in operation of a business in America. This will ensure that they do not come with policies that state laws can challenge when they fail to match the state provisions for the rights and privileges of different individuals in the society. This way, however, would demand the corporation to give out some money to pay for the services of a legal services offered by the specialist. Works Cited Montana Legislative Services. Montana Code Annotated. 39-3-405. Web. July 4th, 2013. . United States Court of Appeal. On Appeal from the United States District Court for the Middle District of Pennsylvania, 2012. Web. July 4th, 2013. . United States. Employment Standards Administration. Wage and Hour Division. Overtime Pay Requirements of the Flsa. Washington, DC: U.S. Dept. of Labor, Employment Standards Administration, Wage and Hour Division, 2008. Print. Read More