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Disney to Pay Out $3.8M in Wage-an-Hour Lawsuit

A little over a week ago saw news of an immense payout as Disney agreed to pay $3.8M to employees of their many resorts and timeshares.  The agreement comes after the United States Labor Department began an investigation into Disney which concluded that they routinely failed to pay employees for around fifteen minutes of work performed before and after their shifts.  Disney was also accused of deducting the expenses of uniforms from employees pay in such a manner that it would occasionally make it so that an employee received less than the minimum wage.

This agreement covers an enormous number of employees, well over sixteen thousand workers.  Thus, this payout isn’t quite as immense as it initially appears–coming out to a bit over $200 per employee.  However, it’s a good example of one of the most common types of legal action in the U.S. –wage-an-hour conflicts.  With this in mind, we’re going to look at exactly what wage-an-hour is and how it works to help you protect your rights as an employee or protect your business from costly lawsuits.

How Wage-an-Hour Works

Wage-an-hour lawsuits generally fall into a couple of categories.  First, where an employee isn’t being paid minimum wage–an obvious violation.  An extension of these lawsuits is what happened in the case of Disney, not paying employees whatsoever for hours worked.  Clearly, zero dollars is below the minimum wage anywhere in the country .  Second, where a company fails to pay their employees overtime hours which they are owed.

DisneyThe Fair Labor Standards Act (FLSA) guarantees each employee will be paid the federal minimum wage throughout the country, currently $7.25 an hour.  However, almost every state has their own individual law which is quite similar to the FLSA.  Minimum wage obviously varies a fair bit from state to state, as does the approach each state takes to enforcing minimum wage.  However, while the legal procedures of pursuing a case may vary a bit state to state, all the cases come down to establishing that you were not paid minimum wage for time worked.  This includes salaried positions where your salary paid divided by your hours worked comes out to less than minimum wage.  There are a couple exceptions to this general rule under the FLSA and many state laws: where tips compensate for what would otherwise be pay below minimum wage, student learners, and employees in training.  Not all of these exceptions are mirrored on the state level, and many of them are quite controversial in effect as they essentially allow pay well below a living wage.  Where an employer fails to pay minimum wage, an employee may sue them–or in many states file an action with a government organization specifically designated to handle such actions–and receive the pay they are due within the time period of the statute of limitations along with potential additional damages through state statutes.  Disney’s agreement bypassed any legal action, instead simply agreeing to pay a fixed amount in reparation for their failure to pay for all the hours their employees worked.

The second common wage-an-hour action, failure to pay overtime, does not particularly apply in Disney’s case.  However, it is important to know as cases dealing with unpaid overtime are extremely common.   Overtime generally includes any hours in excess of 40 in a week, 8 hours in a day, or being required to work more than 6 consecutive workdays.  Where you work overtime, an employer must pay generally pay you time and a half–although some states have situations where an employer must pay an even higher multiplier of your base wage.  There are situations where an employee may be exempt from overtime–most commonly where they receive pay of over $455 per week and have duties -usually within specific statutory categories–which require a certain amount of independent decision making in performing work.  Each state has a different approach to exactly when a position is overtime exempt, and more recently it’s been an issue targeted at the federal level as well.

The Importance of Keeping Complete Records

Disney’s case focuses on failure to pay for time worked, and there was apparently a fair bit of evidence to this point.  However, Disney is rather well known as a particularly litigious company.  So you might be asking yourself, why didn’t Disney fight it out?  The answer may be in the record-keeping practices of the resorts the employees worked at.

The FLSA requires employers to keep accurate records of the hours their employees work as well as wages earned.  These recordkeeping requirements can become more involved from state to state, and even the FLSA has some more specific requirements.

This requirement to keep proper records has sunk many an employer’s chances in a wage-an-hour case.  This is because, where an employer fails to keep proper records, employees can rely on representative evidence to establish the hours they’ve worked. This evidence only needs to be sufficient for a reasonable inference that the employees’ evidence is an appropriate approximation of the hours they worked.  For this reason, it is incredibly important for an employer to keep legally compliant records.  If they don’t, their employees basic approximations of time worked in what format they can provide it–from testimony to crudely kept notebooks–will determine what hours the court will consider that they worked.

Apparently, Disney’s resorts failed to keep statutorily compliant records of the hours worked by many of the employees in the class action lawsuit brought against them.  This likely was the straw that broke the camel’s back when it came to deciding whether to fight the case against them.  Without properly maintained records their chances of success dropped precipitously, they likely simply decided that around $200 per employee wasn’t too much to pay in light of the expenses of litigation and their chances of success.  So as an employer, remember, if bad record keeping can sink Disney it definitely will do you no favors.  As an employee pursuing a wage-an-hour case, if it sank Disney it’s worth determining whether your employer has kept sufficient records if you believe you have been paid unfairly.

Jonathan Lurie


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