Union employers should beware of "retro" raises
June, 2004
Today, wage and hour class action lawsuits surpass the number of class action lawsuits brought under equal employment opportunity laws. Because wage claims are usually excluded under employment practices liability insurance, employers must be watchful to comply with continually developing wage and hour laws. Unwary employers run the risk of paying employees' damages, costs, and attorney fees.
The Todd Shipyards Case
On June 24, 2004, the Washington State Supreme Court held for the first time that Washington's Minimum Wage Act (MWA) applies to one-time retroactive payments in collective bargaining agreements.
The collective bargaining agreement (CBA) at issue had a one-time payment of $.60 per hour for certain eligible employees for prior hours worked. The employer issued checks to eligible employees at the rate of $.60 per attendance hour without regard to whether the hours were regular or overtime. The employer argued the retroactive payment was not an hourly retroactive raise, but was a one-time inducement to ensure the CBA was ratified.
However, the Supreme Court held that the retroactive payment contained in the CBA was tied to all hours worked. The Court held that the employers had violated the MWA when it failed to pay at the higher rate. Even more disturbing, the Court stated that even if the employer had properly characterized this retroactive payment as a ratification inducement, since the payment was ultimately tied to hours worked, the overtime provisions of the MWA would still apply.
Avoiding the application of the MWA
Union employers who negotiate retroactive or one-time payments must be clear in the CBA to specify the use of lump sums or other methods not based on prior hours worked, to attempt to clearly avoid the application of the MWA.
About Bullivant's Employment Counseling and Litigation Group
Bullivant Houser Bailey PC's Employment Law team assists clients with employment issues including litigation and daily human resources management services. Our employment attorneys have the background and experience necessary to handle the unique issues present in many employment disputes including:
- Defense of sexual harassment, race discrimination, sex discrimination, wrongful discharge and retaliation cases
- Americans with Disabilities Act and the Family and Medical Leave Act
- Worker's compensation statutes
- Practical, day-to-day advice and counseling on employment and employee benefit matters
- Investigations
- Training in all aspects of employment law