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News | Aug 24, 2012

New Jersey Federal Judge Refuses to Decertify Overtime Lawsuit Brought by Salespeople

     A defendant’s motion for decertification as to a collective class consisting of “front-line salespeople and “travel club salespeople” was recently denied by the New Jersey District Court in William Zanes, et al. v. Flagship Resort Development.  See 2012 U.S. Dist. LEXIS 22191 (D.N.J. Feb. 22, 2012).  The Court also granted the plaintiffs’ motion for summary judgment holding that the plaintiffs are employees, and not independent contractors, pursuant to the Fair Labor Standards Act (“FLSA”). 

The plaintiffs in this case consisted of travel club salespeople and front-line salespeople who worked over 40 hours each week and did not receive any overtime compensation.  The front-line salespeople sold timeshare units in the Atlantic City area and the travel club salespeople sold trial memberships in the timeshare program.  Both the front-line salespeople and travel club salespeople were paid on a draw against commission.  Plaintiffs argued that based upon the job duties performed by the plaintiffs, they were not exempt from the overtime mandates of the FLSA and the New Jersey State Wage and Hour Law, and were therefore required to be paid overtime for all hours spent working over 40 each workweek.

In ruling upon whether the present and former employees could pursue a collective action against their employer, Judge Irenas held that the plaintiffs were similarly situated despite minor differences in their job duties:  “All Plaintiffs had similar job duties, responsibilities and compensation structures.  All Plaintiffs assert common claims of failure to properly pay overtime compensation in violation of the FLSA.  Although differences between the Plaintiffs in the travel club and front-line departments exist, any such differences are outweighed by the similarities between those Plaintiffs.”

Moreover, in granting the plaintiffs’ motion for summary judgment as to the plaintiffs’ status of employees, and not independent contractors, the court noted that the large amount of control with which the defendant exerted over the plaintiffs’ work demonstrated that plaintiffs are properly classified as employees:  “The Court finds that Defendant controlled the overall manner of Plaintiffs’ work by setting Plaintiffs’ compensation structure, establishing working hours and approving days off, and by requiring Plaintiffs to adhere to its policies in performing work.  While Defendant has identified specific ways that Plaintiffs exercise discretion in making and recording sales of trial-memberships, this limited discretion over the manner in which sales were pitches does not alter the fact that Defendant exercised control over the day-to-day operations of the travel club department.”

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