HR Corner: Jury Issues $22 million Verdict Against Manufacturer on Overtime Claim: What Happened?

By Attorney Nick Zaino of Carmody Torrance Sandak & Hennessey LLP

East Penn Manufacturing is one of the largest battery manufacturers in the world. On May 9, 2023, a federal jury in Pennsylvania awarded $22 million in back wages to over 7,500 employees. According to the United States Department of Labor (US DOL), the award is the largest recorded jury verdict ever obtained by the US DOL for claims under the federal Fair Labor Standards Act (FLSA). And that’s not all. The US DOL has stated that it intends to ask the federal court to award an equal amount in liquidated damages for the affected employees, and the US DOL will seek an injunction requiring future FLSA compliance.
 
The US DOL first investigated East Penn in 2016 after a worker complained that he was not being paid for all his working time. In its investigation the US DOL found that, typically, East Penn only paid employees for their scheduled eight-hour daily shifts and did not pay employees for the additional time it took them to put on and remove protective equipment or to shower to avoid the dangers of lead exposure and other hazards. The US DOL contended this time was compensable and, when that time was added to other working time, employees were working more than 40 hours per week, but not being paid overtime.

After a 30-day trial with testimony from 39 employees, the jury sided with the US DOL, finding that East Penn failed to pay employees for all their compensable working time and failed to pay overtime. The jury’s verdict was significantly less than the $110 million in back wages (plus an equal amount in liquidated damages) that the US DOL was seeking.

This case is a reminder to employers to be careful about paying workers for all hours worked. While this sounds obvious and simple, that is not always the case. Hours worked may include, time spent by employees changing into (donning) and changing out of (doffing) work clothes such as uniforms, protective gear or equipment. And, as the East Penn case illustrates, it may also include other activities, such as showerer, that are necessary for employees to avoid work hazards and dangers. Work time may also include time spent by employees being on-call, time spent attending lectures, meetings and training programs, travel time, and certain rest and meal periods. There are detailed federal and Connecticut regulations on when an such time is compensable.
 
While the specific amount of work time at issue may be small, the total liability can be compounded when it results in other violations, such as failure to pay overtime, and impacts numerous current and former employees. Employers are well-advised to err on the side of caution when deciding what constitutes “working time."

This information is for educational purposes only to provide general information and a general understanding of the law. It does not constitute legal advice and does not establish any attorney-client relationship.