Best Ohio Wage Theft Lawyer Reply: If I sue my boss for not paying me overtime, can she file counterclaim against me? What should I do if my manager threatens to sue me for my uniform costs if I make a claim for my unpaid overtime? What are my rights if my job won’t pay me the overtime wages that I’m owed?
As regular readers of our employment attorneys‘ blog know, the Fair Labor Standards Act (“FLSA“) is a federal law that makes sure that employees are properly paid minimum wage and time and a half for all hours worked past 40 hours in a work week. (See Should Tipped Workers Be Paid Overtime? – Call The Right Attorney; How Do The New Overtime Rules Help Me? – Call The Right Attorney; Should I Be Paid Overtime Even If I’m A Manger? Lawyer Reply; Does My Job Need To Pay Me Minimum Wage?; and What Is Minimum Wage In Ohio For 2016? – Call The Right Attorney). Ohio also has its own overtime (R.C. § 4111.03) and minimum wage (R.C. § 4111.14 ). Despite these relatively straight forward legal regiments, many bosses, managers, and company owners engage in a lot of trick to try and avoid paying their employees properly, like misclassifying them as independent contractors or managers; or telling salaried employees that they are never entitled to overtime (lie!). These tricks are intended to prevent employees from even thinking that they should be paid overtime or in some cases minimum wage.
Today, our wage and hour lawyers are addressing a trick that employers often attempt after they have been confronted by an employee that is demanding to be paid overtime or minimum wage, or after that employee files a wage theft claim. Specifically, how does it play out when an employee sues under the FLSA and the employer counterclaims for money it claims the employee owes it? The answer is that it rarely turns out well for the employer.
First, it is important to note that an employee who succeeds in a FLSA case will usually be entitled to attorney’s fees. By bringing counterclaims, the employer actually increases their liability exposure because they are creating more work (and thus billable hours) for the employee’s attorney. Moreover, if the court determines that the counterclaims are frivolous, it may determine that they are also retaliatory, which would result in the employer may be liable to the employee for post-employment retaliation.
But, even taking all of the consequences of filing a counterclaim in a FLSA case off the table, the prognosis for the employer is still poor. This is because courts almost uniformly have held that – for the same reason it is improper for an employer to make certain deductions – an employer cannot obtain a set off to the minimum wage the FLSA dictates must be paid to employees. Indeed, in an old case called Brennan v. Heard, the Fifth Circuit Court of Appeals held that permitting a counterclaim for the purposes of obtaining an offset to a FLSA claim would be “inappropriate”:
The FLSA decrees a minimum unconditional payment and the commands of that Act are not to be vitiated by an employer, either acting alone or through the agency of a federal court. The federal courts were not designated by the FLSA to be either collection agents or arbitrators for an employee’s creditors. Their sole function and duty under the Act is to assure to the employees of a covered company a minimum level of wages. Arguments and disputations over claims against those wages are foreign to the genesis, history, interpretation, and philosophy of the Act. The only economic feud contemplated by the FLSA involves the employer’s obedience to minimum wage and overtime standards. To clutter these proceedings with the minutiae of other employer-employee relationships would be antithetical to the purpose of the Act. Set-offs against back pay awards deprive the employee of the “cash in hand” contemplated by the Act, and are therefore inappropriate in any proceeding brought to enforce the FLSA minimum wage and overtime provisions, whether the suit is initiated by the individual employees or by the Secretary of Labor.
Because a counterclaim could serve as an improper deduction from wages the FLSA dictates must be paid to employees, courts are often loath to assist the employer in avoiding this requirement.
Courts also often hesitate to allow FLSA counterclaims because of jurisdictional issues. Typically, counterclaims brought in a FLSA case will be based on state law, rather than federal law. As a result, the federal court has neither federal question jurisdiction, nor diversity jurisdiction (plaintiff and all defendants residents of different states, and over $75,000 in dispute). As a result, the only way the court can maintain jurisdiction over the state law counterclaims is to exercise “supplemental jurisdiction.” However, a federal court can only exercise supplemental jurisdiction if the counterclaims are “so related to claims in the action within such original jurisdiction that they form part of the same case or controversy.” And, as the United States Supreme Court held in United Mine Workers of Am. v. Gibbs, when it appears that state law claims “substantially predominate, whether in terms of proof, of the scope of the issues raised, or of the comprehensiveness of the remedy sought, the state claims may be dismissed without prejudice and left for resolution to state tribunals.”
This rationale led the Honorable Judge Paul Maloney of the Western District Court of Michigan to recently dismiss counterclaims that were filed in a FLSA case, Cruz v. Don Pancho Mkt., LLC. In Cruz, the plaintiff had filed a one-count complaint alleging unpaid wages. In response, the Defendant employer filed a four-count counterclaim based on state law, to include breach of contract claims, and a claim for abuse of process. The plaintiff then amended his complaint to include a claim for FLSA retaliation. The employer moved to dismiss the retaliation claim, and the plaintiff moved to dismiss the counterclaims. In granting the plaintiffs motion (and denying the employers), the Court found that it simply lacked jurisdiction to adjudicate the counterclaims:
This case, at its outset, represented a straightforward, one-count complaint for unpaid wages under the FLSA. Defendants then, prior to filing an answer, added counterclaims with respect to an unrelated loan on state-law grounds of “breach of contract,” “fraud,” and “conversion.” Simply put, the first three claims do not arise out of the same “case” or “controversy” for constitutional purposes. See 28 U.S.C. § 1367(a) (“[I]n any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.” (emphasis added)). Defendants, perhaps recognizing that all but one of their claims do not concern the same “case” or “controversy,” posit a theory that their claims all “logically relate[ ] to their [fourth] claim that [Plaintiff] abused process to extort money from them.” But as the Court will discuss momentarily, the abuse of process claim is frivolous and regardless, each of the claims here must “relate to claims in the action within such original jurisdiction that they form part of the same case or controversy.” 28 U.S.C. § 1367(a). It does not suffice to throw in unrelated claims of fraud, breach of contract, and conversion, and use an improper “abuse of process” claim as the hook for which all claims allegedly “logically relate.” And it is certainly not sufficient to allege that “[t]he counterclaims stem from the same common nucleus of operative fact because they flow from [Plaintiff’s] repeated attempts to pilfer money from his former employer.” A generalized theory with respect to alleged “repeated [unrelated] attempts to pilfer money” does not suffice to satisfy the case and controversy requirement.
The takeaway from this is that employers cannot defeat their legal obligations under the FLSA by deducting or offsetting an employee’s wages with money they believe the employee owes them. Instead, the employee must be paid properly in compliance with the law first. If the employer is owed money, they cannot put that debt ahead of the employee’s wages. They must instead attempt to collect after the employee has been made whole.
If you believe that your employer is not paying you all of your wages for all of your lawfully earned overtime compensation at a rate of one and half times your normal wages as requires under the Federal Fair Labor Standards Act or Ohio Minimum Fair Wage Standards laws or you are an nonexempt employee that has been misclassified as exempt or independent contractor, contact the attorneys at Spitz, The Employee’s Law Firm today for a free and confidential initial consultation. The wage and hour lawyers at Spitz, The Employee’s Law Firm will provide you with the best options for your overtime pay dispute situation. If you even think that you may be entitled to overtime pay that you are not being paid, call 866-797-6040.
The materials available at the top of this overtime, wage and hour web page and at this employment law website are for informational purposes only and not for the purpose of providing legal advice. If you are still asking, “Am I entitled to overtime?”, “Does my job have to pay me for …”, “My paycheck is not right…” or “What do I do if…”, the your best option is to contact an Ohio overtime attorney to obtain advice with respect to FLSA questions or any particular employment law issue. Use and access to this employment law website or any of the links contained within the site do not create an attorney-client relationship. The legal opinions expressed at the top of this page or through this site are the opinions of the individual lawyer and may not reflect the opinions of Spitz, The Employee’s Law Firm, Brian Spitz, or any individual attorney.