When Gary R. Oberholtz signed on as a salaried network engineer for Computer Sciences Corp. (CSC) in 2000, he thought he'd found the ideal job. Especially appealing: He says he was promised a 40-hour workweek. But soon Oberholtz was routinely working 48-hour weeks and many weekends, he says. When he asked about overtime, his bosses at the El Segundo (Calif.)-based provider of tech services told him he wasn't eligible under state and federal employment laws.
Now, four months after being laid off, Oberholtz is suing. He joined a class action filed on Nov. 12, alleging that CSC dodged paying overtime to some of its employees by improperly classifying them as exempt. "I want to send a message," Oberholtz says. "If you're going to make us work all these hours, you have to compensate us."
CSC, which cited the pending litigation in declining to comment, isn't the only target of overworked techies. Last April, two trainers for Oracle Corp. (ORCL) launched a class action seeking unpaid overtime pay. A spokesman for the software giant says it believes it pays employees in accord with all prevailing laws. Yet lawyers for both cases say they've been fielding calls from employees of other tech companies. If successful, the suits could touch off a wave of new charges. Says Jill Springer, a human resources consultant who has worked for several large Silicon Valley companies: "These lawsuits are red flags."
Lawyers for the plaintiffs insist they are on solid footing. They point to the hundreds of millions of dollars in back pay doled out over the past two years for workers from companies ranging from RadioShack Corp. (RSH) to Starbucks Corp. (SBUX). In 2001, a jury found Farmers Insurance Group guilty of denying overtime pay to 2,400 claims adjusters and ordered it to pay $90 million. The case is under appeal. "This whole area has the plaintiff's bar drooling," says Joyce L. Oliner, a partner with Shaw Pittman, a Washington, D.C., law firm that defends employers in labor suits.
One reason lawyers find such cases enticing is that labor laws on overtime are vague. The Labor Dept. is working on clarifying federal law and hopes to have a list of proposed changes finalized by early 2004. In the meantime, lawyers have been having a field day alleging that companies withhold overtime pay from workers by misclassifying them as "administrators" or "professionals."
The tech industry, though, is a special case. A 1992 amendment to the federal Fair Labor Standards Act stipulates that any computer professional who is an analyst, programmer, or software engineer shouldn't be paid overtime. But James M. Finberg, who represents the plaintiffs in the CSC case, says thousands of workers who've been denied overtime are responsible for maintaining their clients' networks, not designing them. "Their jobs are not creative," says Finberg, a partner with Lieff Cabraser Heimann & Bernstein LLP in San Francisco. "These people perform mechanical functions. The law says they're entitled to overtime."
The industry is making changes. In September, Oracle quietly reclassified its California-based trainers as eligible for overtime pay under state laws. To cushion the potential financial blow, the company says it cut base compensation 10% and told workers they can't work extra hours without asking permission.
For employees who continue to work long hours, overtime compensation will remain fertile ground for lawsuits. "There's a lot of abuse of employees going on," claims Daniel Gabel, one of the lead plaintiffs in the Oracle case. And many more of his cohorts could decide to raise a stink. By Arlene Weintraub in Los Angeles, with Jim Kerstetter in San Mateo, Calif.