As throngs of shoppers flock to stores tonight for some last-minute holiday shopping, some of the retail employees stocking shelves and ringing up purchases may be working, essentially, for free. Mike Sunnucks of the Phoenix Business Journal reminds his readers that “[i]t’s actually legal under labor laws for retailers (and other employers) to have managers and other salaried workers ‘volunteer’ to work the floor and registers with hourly workers.” In other words, “[j]ust like office-based salaried workers put in extra hours (without overtime pay) to attend events or meetings or meet deadlines, retailers can ask managers to chip in above and beyond during busy times such as Christmas.” That could significantly change, of course, if the Obama Administration is successful in its effort to raise the overtime pay threshold for managers and other salaried workers, who are currently ineligible for overtime if they make more than $23,660 per year. Instead, President Obama wants to set the the threshold at $50,440 per year, which could extend overtime eligibility to as many as five million employees nationwide.
The Uber class-action lawsuit currently making its way through federal district court continues to make headlines. Reuters and Bloomberg report that the company will seek a stay of the entire proceedings from the Ninth Circuit Court of Appeals after District Judge Edward Chen denied a similar request. The move comes in the wake of Judge Chen’s December 9 order expanding the number of drivers who are eligible to join the suit and allowing drivers to seek expense reimbursement in addition to tips — thereby raising the stakes of the case by hundreds of millions of dollars. Although Judge Chen agreed to defer issuing a final order on that issue while the company appealed his ruling, Uber wants a complete stay in the case.
Per Quartz, Judge Chen also denied the drivers’ motion for a bench trial. Asserting that whether Uber drivers are employees or independent contractors is a mixed question of law and fact, Judge Chen further noted that the case presents several disputed factual questions, including whether Uber can fire its drivers at will. The trial is currently slated to begin in June 2016, appellate proceedings notwithstanding.
Uber may become one of the few “unicorns” — that is, a private company valued at $1 billion or more — to eventually reap untold dividends for its investors and stock option–laden employees (read: not drivers). But “who loses out when a company backed by venture capital goes south?” In the case of mobile security start-up Good Technology, the answer is rank-and-file employees. The New York Times tells the cautionary tale of the California-based company that, armed with a $1.1 billion valuation and eyes on a pending IPO, turned down a $825 million acquisition offer only to be swallowed up six months later by BlackBerry for $425 million. Although that may not seem like a paltry sum — indeed, “the six investors on the [Good] board had preferred shares worth a combined $125 million,” and Good’s CEO “took home $4 million, as well as a $1.9 million severance payment” when she subsequently left the company — rank-and-file employees “generally own common stock, whose payout comes only after those who hold preferred shares get their money. In Good’s case, the board’s preferred stock was worth almost the same as all 227 million common shares outstanding.” In fact, a number of employees actually lost money: Good’s “high valuation increased the paper value of employee shares — and thus the income tax bills levied on their stock when they received the stock grants, or when they bought and sold shares. To pay those taxes, some employees emptied savings accounts and borrowed money.” In other words, while investors and executives structured cashed out to the tune of millions, employees were left holding the bag. “We listened to these executives and, in the end, incurred huge tax bills because we trusted them,” said one employee. “Employees essentially ended up paying to work for the company.” Unfortunately, the story of Good does not seem to be a unique one: one legal analyst noted that “[i]t’s not unusual for employees to be wiped out while venture capitalists make money.”
Finally, a bit of good news for the 20,000 nonunion employees of the City of New York. The New York Times reports that New York City Mayor Bill de Blasio will offer — via executive order — up to six weeks of paid parental leave to nonunionized managers and city workers. Although those workers represent only a fraction of the 300,000 workers who make the Big Apple tick, the Times notes that City Hall is “eager” to explore providing similarly generous leave to union employees. In a statement, Mayor de Blasio contended that “[t]oo many new parents face an impossible choice: taking care of their child or getting their paycheck. This is a common-sense policy that will make for healthier and more financially stable working families.” Workers rights advocates are hopeful that the move will trickle down to non–city employees: “[The Mayor’s executive order] adds to the momentum to pass a broader family leave bill at the state level,” said one nonprofit leader.