Saturday, 31 July 2004 17:00

Sterling sued for avoiding overtime pay

Two former employees of Sterling Autobody Centers filed a lawsuit against their former employer charging federal labor law violations that allegedly resulted in employees not receiving overtime pay. The suit seeks class action status on behalf of Sterling employees across the country.

Sterling, which is a wholly-owned subsidiary of Allstate Non-Insurance Holdings, Inc., operates 15 collision repair centers in Texas and about 48 others across the country.

The named plaintiffs - Dong Yi and Edgar Martinez - were employed by Sterling in the Chicago area. They allege that Sterling violated the Fair Labor Standards Act by defining them as "commissioned employees" and, based on that definition, not paying overtime to employees who otherwise would be entitled to it under the Fair Labor Standards Act.

Sterling uses team repair concept

The plaintiffs allege that the company placed them in working teams which numbered as many as 15 members, then paid each member a percentage of the team's "booked" earnings, rather than paying for actual hours worked.

Allstate spokesman Bill Milander said the company "certainly disagrees" with the contentions in the lawsuit but that they do not comment on pending litigation. He said that the company does use a "team repair concept" in its facilities across the country.

The suit seeks monetary damages for the plaintiffs and asks that Sterling be declared to have "willfully and wrongfully violated their statutory obligations and deprived plaintiffs of their rights, protections, and entitlements under the Fair Labor Standards Act." Although Sterling classified its technical employees as commissioned - and thus exempt from overtime rules - it paid them on an hourly or flat-rate basis, according to the suit.

Sheila Loftus, editor of Washington, D.C.-based Hammer & Dolly, interviewed Jeffrey L. Taren, one of the plaintiff's attorneys, about Sterling's method of payment and the strength of the plaintiff's case.

Just saying it doesn't make it so

Taren said the Sterling team pay system "looks like an effort [by Sterling] to avoid their obligations to pay overtime."

He explained that one of the criteria for being a "commissioned employee" is the ability to control his or her own hours. "If you work on an hourly or flat-rate basis, you don't control your hours of work at all or the days you work. You're not semi- independent like many commissioned employees are. You're really a shop worker. You show up when they tell you to show up. You do the work. You don't go out and get your own business, which most commissioned employees do."

The lawsuit alleges that the employees were not exempt from overtime as they were employed as detailers, technicians, estimators, assistants and apprentices, en-gaged in skilled, semi-skilled or unskilled work and did not engage in any retail sales or service, did not solicit business or other sales and did not act in an exempt, supervisory or managerial capacity. The employees did not control their work hours, the scheduled days to work, the job assignments received, or the manner in which they were compensated, and none had the ability to hire or fire other employees."

The lawsuit describes the system Sterling allegedly used to pay its em- ployees: Repair technicians were put into teams and paid based on the team's hours. "Instead of being paid solely for the tasks each employee performed, each employee was paid a fluctuating percentage of the total hours "booked" by the team in a given week, which may or may not correspond to the number of hours actually worked in a given week," the suit states.

Like running in place

The suit alleges that the greater number of people on a team, the more each individual team member had to work to earn his or her same weekly wage. According to the suit, "between June 2001 and February 3, 2003, Sterling at its Rolling Meadows, Illinois facility, workplace of the two plaintiffs, increased the size of the teams from five employees to 10 employees to 12 employees to 15-employee teams.

"While the greater number of team members meant that the team was booking a greater number of total hours, the percentage of hours attributed to each team member became smaller and smaller."

"It happened rapidly," Taren said of Sterling's increase in the size of its teams. "And it just kept increasing. It never decreased."

The suit further alleges that Sterling's payroll policy "forced and/or coerced the plaintiffs to work long hours and thus took jobs away from workers who prefer to work more regular, shorter hours."

Taren commented, "There's a problem when you push people to work long hours in an industry where you're working around machinery that weighs a ton. I've heard people talking about working 20-hour days sometimes at the end of a cycle to get the flat rate and the flat dollars in."

The case has been assigned to U.S. 7th District Court Judge Paul Plunkett in Chicago.

Some of the information for this article was provided by Sheila Loftus, publisher of the Crash Network weekly newsletter. Crash provides a weekly summary of important collision industry news. To subscribe please call (202) 537-3270.


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