Chipotle Sued for Allegedly Shorting on Overtime Pay
After a new overtime rule was issued by the Labor Department, employers were required to pay overtime to workers even if they were salaried, up to $47,476 per year. This was a steep increase from the prior amount of $23,660. Before the rule could be effected, a Texas court injunction stopped the Labor Department from carrying out enforcement of the rule. A lawsuit filed by plaintiff, Carmen Alvarez, alleges Chipotle should have still paid overtime even though the injunction was in place. Alvarez, an apprentice training for a general manager position at different Chipotle locations, asserts private employers were not affected by the injunction and should have paid overtime. The suit, which was filed in U.S. District Court in New Jersey, seeks class-action status. Attorneys for Chipotle employees, who have litigated in the past in other high-profile cases against employers, are arguing that the rule still took effect on December 1st because the injunction is not final and does not repeal the regulation. They are also claiming the injunction was applicable to only the Labor Department, leaving the door open for other parties to enforce the rule in courts.
While some counsel agree with the plaintiff and say an injunction does not put a stop to a finalized regulation, other legal experts hold the opinion that the injunction was enough to keep the regulation from becoming effective. The Labor Department was in the process of appealing the injunction under Obama, but the Trump administration says they need more time to consider the case in order to decide how to treat it. June 30 is the deadline for the administration to file a brief with the court.
Those that oppose the regulation include several states, corporations, and even the U.S. Chamber of Commerce. The vehement opposition is fueled by the steep increase, an almost doubling of the previous threshold for overtime pay. Incremental increases are expected, even though they may also be fought; however, this increase is so large as to place a burden on employers, in the opposition’s view. While some employers have raised wages or adjusted schedules, other companies are waiting to see what happens in court before implementing any major changes. In addition to the private sector’s concerns over costs, the new administration’s Labor Secretary, Alexander Acosta, described the lag of update to the rule for more than a decade as “unfortunate”, but also agreed with the private sector that the large increase could “create a stress on the system”.
Some employees had received overtime pay for a few weeks or a month before the injunction happened. Alvarez said it was helpful to have the additional pay and that it helped keep her schedule more regular. The extra pay, however, only lasted a few weeks before she went back to her regular salaried paycheck.
John McDuff Can Help With Overtime and Improper Compensation Cases
Those that have any experience in the legal field know that one should never assume to know the outcome before it is issued by the court. Although it seems obvious to both sides that they are right, we won’t know until late June. It will certainly be interesting to see how the court weighs the steep increase against the needs of employees across the country.
If you have an improper compensation case in Austin, TX, call John McDuff, Attorney at Law today.
