Kentucky Employment Law Blog: wage theft

wage theft

April 01, 2020

RICO Claims Can Arise from Wage Theft Scheme, Sixth Circuit Rules

Employees at Vitale's Italian Restaurants kept two timecards, "one reflecting the first forty hours of work, and the other, reflecting overtime hours. The employees were paid via check for the first card and via cash for the second. The pay was at a straight time rate on the second card, although it reflected hours worked in excess of forty hours in a week." As a result, "employees were deprived of overtime pay, and Vitale's did not pay taxes on the cash payments." This was the context for the Sixth Circuit's decision in Torres v. Vitale, which held that the plaintiff-employees could pursue a civil RICO claim regarding the employer's failure to pay social security and other taxes for the work time for which cash was paid.

The Sixth Circuit, in an opinion authored by Judge John K. Bush and joined by Judges Raymond Kethledge and Julia Gibbons, reversed a dismissal order by Western District of Michigan Judge Paul Maloney. The employees had sought recovery of their unpaid overtime by way of suit under the Fair Labor Standards Act (FLSA). The Sixth Circuit ruled that FLSA precludes RICO claims "to the extent that the damages sought are for unpaid minimum or overtime wages." This preclusion, however, does not extend to damages distinct from unpaid wages or overtime:

when a RICO claim ... is based on a dispute between an employer and an employee alleges damages that are distinct from unpaid wages, even if the RICO-predicate act arises from conduct that also violates the FLSA, then the RICO remedies do not fall within the ambit of the FLSA's remedial scheme and are therefore not precluded.

Based on this analysis, the Sixth Circuit affirmed dismissal of RICO claims premised on the employers' "wage theft scheme." Dismissal of a RICO claim alleging a "workers compensation insurance scheme" by the employer "benefitted by falsely reporting payroll to its insurance company, thus lowering its premiums" was also affirmed because the insurance company, not the plaintiffs, was the victim of that scheme. However, a RICO claim arising from "a tax evasion scheme through which [plaintiff] and other similarly-situated Vitale's employees were deprived of the employer's half of social security payments, and were then subjected to tax liabilities" was reinstated and remanded to determine whether the plaintiff had "pleaded cognizable damages separate from lost wages so as to state a viable RICO claim."

This case was well-lawyered for the plaintiff by Robert Alvarez of Wyoming, Michigan.

Robert L. Abell
www.RobertAbellLaw.com

Posted at 06:06 PM in Fair Labor Standards Act, overtime, RICO, wage theft | Permalink | Comments (0)

Tags: FLSA, RICO, Sixth Circuit, wage theft

February 24, 2019

Wage Theft from Carwash Workers; The Little Guys Win One

Workers at New York City area car washes have recovered about $8.5 million in a wage theft case, the New York Times reports, A Multi-million Dollar Payoff at the Carwash.

A musical tribute:

Every now and then the little guys win one ... and Justice for All.

Robert L. Abell
www.RobertAbellLaw.com

Posted at 08:28 PM in Fair Labor Standards Act, overtime, wage theft, wages | Permalink | Comments (0)

Tags: wage theft

February 19, 2018

Wage Theft Enabled by Declining State Enforcement

States, particularly in the South, have abandoned or nearly abandoned efforts to enforce their wage and hour laws that require payment of overtime and/or the minimum wage, as reported in Politico, Minimum Wage Large Unenforced.

Wage theft is not a new problem, as we've discussed before here, Wage theft is wage theft and "What a thief does with his loot is immaterial to the victim's claim against him"; Wage Theft - The Good Guys Win One in Braun v Walmart, and at www.RobertAbellLaw.com: Wage Theft and Lexington's New Minimum Wage Law; Unpaid Wages and Wage Theft; Wage Theft - 9 out of 10 Fast Food Workers Are Victims; Working Off the Clock & Wage Theft: Inside the McDonald's Suits.

Robert L. Abell
www.RobertAbellLaw.com

Posted at 10:29 AM in Fair Labor Standards Act, overtime, wage theft, Wal-Mart | Permalink | Comments (0)

Tags: overtime, wage theft

June 08, 2015

Is A Plaintiff's Testimony Alone Enough to Sustain an Overtime Claim?

Overtime claims arise where there are no records kept of the hours the employee works, or where the records are incomplete and therefore false or are just false, as in fabricated for purposes of litigation. So it can develop that a plaintiff's claim for unpaid overtime may rest on his or her testimony alone regarding the hours he or she worked. Is this enough for a jury to find in the plaintiff's favor? "Yes" answered the Sixth Circuit recently in Moran v Al Basit LLC (June 1, 2015).

The plaintiff, Moran, worked for a couple of different auto repair shops owned by defendant. He claimed that he worked every week 65-68 hours. The defendant offered time sheets purporting to show that Moran worked "exactly thirty hours a week, despite his schedule varying notably from week to week." Furthermore, one of defendant's agent offered that he customarily reviewed security camera footage to verify/determine the employees' work hours, which he then recorded on paper, but, as it happened, these papers could not be located by the time of suit. Moran asserted that their existence had been fabricated in any event.

So Moran's main nearly only evidence was his word. The district judge, Hon. Judith Levy, granted summary judgment to the defendant. The issue before the Sixth Circuit was whether Moran's word alone good enough for a jury to find in his favor:

This appeal raises one simple question: Where Plaintiff has presented no other evidence, is Plaintiff’s testimony sufficient to defeat Defendant’s motion for summary judgment? We hold that it is. Plaintiff’s testimony coherently describes his weekly work schedule, including typical daily start and end times which he used to estimate a standard work week of sixty-five to sixty eight hours. The district court characterized this testimony as “somewhat vague.” However, while Plaintiff’s testimony may lack precision, we do not require employees to recall their schedules with perfect accuracy in order to survive a motion for summary judgment. It is unsurprising, and in fact expected, that an employee would have difficulty recalling the exact hour he left work on a specific day months or years ago. It is, after all, “the employer who has the duty under § 11(c) of the [FLSA] to keep proper records of wages [and] hours,” and “[e]mployees seldom keep such records themselves.” Defendants emphasize the fact that Plaintiff’s testimony is inconsistent with the allegedly contemporaneous timesheets Defendants provided to the court. But these timesheets do not amount to objective incontrovertible evidence of Plaintiff’s hours worked. Plaintiff denies the validity of these timesheets, which were handwritten by Defendants, and contends that Defendants sanctioned his overtime work. Whether his testimony is credible is a separate consideration that is inappropriate to resolve at the summary judgment stage.

Robert L. Abell
www.RobertAbellLaw.com

Posted at 09:14 PM in Fair Labor Standards Act, overtime, wage theft | Permalink | Comments (0)

Tags: Judge Judith Levy, overtime, Sixth Circuit

May 13, 2015

Wage theft is wage theft and "What a thief does with his loot is immaterial to the victim's claim against him"

Katisha Ednacot claimed that her employer, Mesa Medical Group, stole her money -- wages she had earned and was owed -- and used the money to cover its portion of FICA and federal unemployment taxes it owed. She pleaded claims of conversion, breach of contract and failure to pay earned wages under Kentucky's wage and hour law, KRS 337.385. Nevertheless, her suit was removed to federal court, recast as one seeking to recover wrongfully withheld taxes and then dismissed, because claims for wrongfully withheld taxes must first be presented to the IRS.

The Sixth Circuit affirmed the dismissal of Ednacot's suit, Ednacot v. Mesa Medical Group, based on a prior ruling in Berera v. Mesa Medical Group. Being bound by the prior precedential decision Judge Alice Batchelder concurring in the ruling but recognized the essence of Ednacot's claim: that her earned wages had been stolen by her employer and then used to pay off the employer's obligations as to FICA and federal unemployment taxes. Wage theft is wage theft as Judge Batchelder so eloquently stated:

But what a thief does with his loot is immaterial to the victim's claim against him.

The Sixth Circuit denied en banc review of the Berera case; perhaps Judge Batchelder's analysis will spur the court to reconsider that and grant en banc review in this instance. Hopefully, it will not prove that the court's misguided opinion in Berera lives to create a wage theft shelter.

Robert L. Abell
www.RobertAbellLaw.com

Posted at 08:57 AM in wage theft, wages | Permalink | Comments (0)

Tags: Judge Batchelder, Sixth Circuit, wage theft

February 14, 2015

An Employer Who Knows or Has Reason To Know That An Employee's Time Records Underreports Their Work Hours May Not Escape FLSA Liability Based on the Employee's Failure to Fully Report the Hours Worked

Can an employer that knows or has reason to know an employee has worked overtime get out of paying overtime if the employee does not complain immediately about not being paid the overtime? "No" answered the Eleventh Circuit recently in Bailey v. Titlemax of Georgia in reversing a summary judgment granted by U.S. District Judge Marvin H. Shoob of the Northern District of Georgia.

Santonias Bailey was a victim of wage theft while working for Titlemax of Georgia. His supervisor told him that Titlemax did not pay overtime and made him work off the clock. His supervisor also altered his time cards to reduce the amount of time they reported Bailey had worked. Bailey sued for his overtime pay after leaving Titlemax's employment.

Titlemax's answer was, basically, so what? It blamed Bailey and pointed out that he had not followed its policies of reporting his supervisor's misconduct and accurately reporting his time worked on his time cards. According to Titlemax, Bailey was to blame for having his wages stolen and was entitled to nothing. This succeeded in the district court, which granted Titlemax summary judgment and dismissed Bailey's overtime claim.

The Eleventh Circuit reversed. It framed the question as follows:

if an employer knew its employee underreported his hours, can it still assert equitable defenses based on the employee's conduct in underreporting as a total bar to the employee's FLSA claim?

Put another way, the question is whether an employer can get away with intimidating an employee into letting wage theft slide? The FLSA was intended to police and prevent just that sort of abuse the Eleventh Circuit observed: "the goal of the FLSA is to counteract the inequality of bargaining power between employees and employer." This principle guided the court's holding:

If an employer knew or had reason to know that its employee underreported his hours, it cannot escape FLSA liability by asserting equitable defenses based on that underreporting. To hold otherwise would allow an employer to wield its superior bargaining power to pressure or even compel its employees to underreport their work hours, thus neutering the FLSA's purposeful reallocation of that power.

The court also noted that it could find no case where an employer's wage theft had been excused where the employer knew the employee's work hours were underreported and still it got away with wage theft because the employee did not immediately demand full compensation.

The Eleventh Circuit's unanimous opinion was authored by Circuit Judge Beverly Martin joined by Circuit Judge Lanier Anderson and visiting District Judge Denise Cote of the Southern District of New York.

Robert L. Abell
www.RobertAbellLaw.com