UPS settles supervisors lawsuit for $18 million
Michael Kinsman
The San Diego Union-Tribune
Oct 23, 2002
Nearly 6,000 current and former part-time supervisors at United Parcel Service in California have won an $18 million settlement over back pay in a San Diego lawsuit that caused the delivery company to revise the way it classifies exempt employees.
The settlement calls for UPS to pay between $200 and $5,300 to part-time supervisors who worked unpaid overtime over a six-year period beginning in May 1996. UPS had misclassified those supervisors as exempt and ineligible for overtime pay.
Settlements over the misclassification of supervisors in nonmanagerial jobs have been common in California. Over the past year and a half, companies such as Pacific Bell, Taco Bell, Farmers Insurance, Bank of America and Rite-Aid have been hit by jury awards or court-approved settlements.
The UPS case is believed to be the first suit settled in California over part-time supervisors.
Debra Hurst, a San Diego attorney who worked on the suit, said she believes the case could set a precedent for fast-food restaurants, convenience stores, gas stations and other businesses that depend on part-time supervisors.
The settlement was reached in late May, but UPS stipulated that it remain sealed and confidential until the company reached a national contract with the International Brotherhood of Teamsters. A new six-year agreement with the Teamsters was ratified in late August.
Hurst, who revealed the settlement, said it was being done to call attention to former and current part-time UPS supervisors who may be eligible for back pay. About 50 percent of those individuals already have come forward, she said.
Although the case was settled before class-action certification was granted, former and current supervisors are asked to file a class-action claim. Hurst contended class-action status would have been a virtual certainty had the case not been settled.
The lead plaintiff in the case was George Russ Archie, a San Diego resident who worked for UPS for 18 years. Hurst said Archie had tried repeatedly to win overtime pay from UPS. He voluntarily left the company last summer, Hurst said.
In the suit, he contended that UPS workers regularly worked seven- or eight-hour days while being paid for just five hours. Part-time supervisors earned an average of $14 per hour, but saw that drop below $11 an hour because of the unpaid overtime demands.
We had no case law to go on, Hurst said. UPS was clearly taking advantage of these part-time supervisors by making them work extra hours week after week and then claiming that they were exempt and not entitled to overtime pay.
Hurst said UPS violated California law that requires exempt workers to earn twice the minimum wage and that the part-time supervisors were not supervisors at all, but acted more like lead workers who were expected to stay and work without pay to complete the jobs of nonsupervisors when their shifts had ended.
They were taking advantage of these individuals by claiming they were exempt workers, she said. In fact, these people have virtually no discretion in how to do their jobs and did the same work as nonsupervisors.
California law allows exempt status for managers, professionals and administrators who spend more than half their time on managerial, intellectual or creative work. Other exemptions are allowed for such jobs as outside sales and computer systems support.
In court documents, UPS contended it had done nothing wrong in its treatment of part-time supervisors and had complied with California wage and hour provisions.
Company spokesman Malcolm Berkley said part-time supervisors earn an average of $21,000 per year and are part of the management staff.
These are still management employees with a base salary, management benefits and management duties, Berkley said.
Part-time UPS supervisors in California are now paid a salary for 27 1/2 hours per week, with a 10 percent differential for each hour worked above that to 40 hours, when they are paid the state-mandated time and a half.
Berkley said the revision was made Sept. 1 to comply with changes in the California Labor Code.
In a letter sent to part-time supervisors in late August, the company admitted a connection between its pay revisions and the San Diego lawsuit.
About 40 percent of UPS domestic workers are unionized part-time employees. The company uses 3 1/2 - to five-hour shifts as a way of controlling labor costs and handling the daily ebb and flow of its package shipments.
