Oops!
Posted on 26-Feb-10 by The Timekeeper
OK, so I’ve noted a bunch of cases covering employee classification issues — you know, where people are classified as exempt from overtime, but it turns out they should have been paid OT, or where they’re called “independent contractors” when they’re really employees.
So if you’ve been paying attention, you’ll know it’s pretty much standard procedure for the employer to claim they properly classified everybody. But here’s an interesting case out of Montana that puts a bit of a twist on the standard course of events.
The Back Story
Seems back in 2004, several employees of Energy West, including Delores Tacke (the supervisor of their credit and collection department) attended a seminar on wage and hour law.
Up until that time, Delores had been considered exempt from overtime — maybe Energy West fell prey to the common misconception that all salaried employees are exempt from overtime, or that all it takes to be exempt is a “managerial” sounding title. In any case, it seemed pretty clear (well, pretty clear to me, at least) her actual job duties — things like opening mail, filling in for the switchboard operator on breaks and printing customer delinquency notices — were not those of an exempt employee.
Following the seminar, it seems several actual managerial employees at Energy West may have come to the same conclusion, because after providing the Director of Operations and corporate counsel with a list of her job duties, Delores was reclassified as non-exempt (i.e. entitled to overtime).
The Oopsies
So far, so good. But of course you know things had to start going downhill — otherwise, I probably wouldn’t be writing about this case at all! 
Oopsie Number One: It may have then occurred to Delores on her own — or with the “help” of an enterprising employment lawyer — that she’d been working overtime for a long time without getting compensated for it. (She joined the company in 1970.) Despite this, apparently Energy West wasn’t forthcoming with any “make-good” money for all the time she’d worked uncompensated overtime in the past.
The company probably could have headed all the ensuing drama off at the pass simply by paying Delores two years’ of back overtime wages. Since she could only go back two years if she filed a lawsuit, paying her for any OT worked during those two years would have effectively removed any grounds she might have had to file suit in the first place.
Oopsie Number Two: So eventually she filed a lawsuit seeking back wages for the previous two years (a total of a little over $35,000). Now, at this point the company probably still could have salvaged the situation by simply paying her the $35,000 overtime. Again, pay the OT and remove the basis for the suit.
But noooo.
Oopsie Number Three: When Delores filed the lawsuit, the company tried to go back and re-classify her as exempt again, then claimed in court they didn’t owe her overtime because she was exempt. Sigh.
Yeah, as if that was going to work.
As you likely expected, the jury found in favor of the plaintiff. But evidently, Energy West doesn’t give up easily, because the case eventually went all the way to the Montana Supreme Court. And the decision came down recently: the jury was right. Energy West owes Delores overtime pay.
The Result: Energy West has to cough up $70,440 to Delores for overtime and damages, $10,500 to cover her costs and about $186,000 in attorneys’ fees — a total of about $267,000.
Compare and contrast with the approximately $35,000 they would have had to pay if they’d just forked over the two years’ of overtime up front.
The Rest of the Story
So, Delores gets about $80,000. Her attorneys get about $186,000. She’s classified as non-exempt, so she gets overtime going forward.
And interestingly enough, five years after the seminar that started this snowball rolling down the hill, she reportedly still works at Energy West… so I guess it’s a case of all’s well that ends well.
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