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The Journal Gazette

Monday, October 19, 2009 5:00 am

Charities being sued for not paying overtime

By JOHN PACENTIDaily Business Review

Ana Siberio worked for six months as an assistant house manager at Ronald McDonald House Charities of South Florida.

She said it wasn't unusual to work seven days a week at the nonprofit charity that provides housing for sick children and their families during medical treatment.

The Miami woman estimates she regularly worked about 70 hours a week and is owed more than $20,000 in unpaid overtime for the job she left in April.

When she asked to come in an hour later to take her son to the doctor, she was denied her request.

"She told her supervisors that she wanted to start clocking in and out, and they told her that she was not allowed to," said Michael Scheve, Siberio's attorney at the Shavitz Law Group in Boca Raton. "She did enjoy her job, just not the OT and treatment by management."

Siberio filed a lawsuit against the charity Sept. 10 in Miami federal court, alleging overtime violations under the Fair Labor Standards Act.

Altruism may be a ticket into heaven, but it also may lead nonprofits that flout federal labor standards for nonexempt employees to the courthouse door.

In the troubled economy, charities and nonprofits have been hit hard. Donations are down, staff has been cut, and some corners are being cut.

Michael Casey, managing partner of Epstein Becker & Green's Miami office, said major national nonprofits like the Boy Scouts of America and United Way run sophisticated operations similar to big corporations.

"The problem hits the smaller, local nonprofits just like it hits the smaller employers," he said. "The dismal economy has caused a lot of employers to fudge quite a bit on the wage-and-hour front. They will tell some employees, 'We can't afford the OT, but we need the work done.' The law says you can't do that."

The lawsuit against Ronald McDonald House was not filed on a whim. The Labor Department investigated Siberio's claim and determined her employer was a nonexempt charity violating the overtime provisions of the Fair Labor Standards Act, Scheve said.

"I can only remember a handful of nonprofits we have sued," he said.

"It's not that we target them," Scheve said. "It's just that they are an employer like everybody else. Just because they do something good doesn't mean they get a free pass."

Soraya Rivera-Moya, the executive director of Ronald McDonald House Charities of South Florida, declined to discuss the pending litigation. "We are focused on providing comfort and care to more than 50 families who stay at the Ronald McDonald Houses of South Florida every day."

In some ways, nonprofits are just mirroring other businesses.

A new Labor Department report said the rights many Americans have taken for granted - minimum wage, overtime pay, meal and bathroom breaks, access to workers compensation - are disappearing from the workplace.

The report looked at 4,387 workers in Los Angeles, New York and Chicago, and found 22 percent had suffered overtime abuses of some type in the previous week.

The Fair Labor Standards Act stipulates that covered employees must be paid time and a half for all hours worked over 40 in a week.

Nonprofits are prone to push this boundary, said Jennifer Chandler, director of network support at the National Council of Nonprofits in Washington.

"Even though they are mission-based and doing wonderful things in the community, they still have to follow the law," she said.

The Labor Department is cracking down on nonprofits, especially in the recession where nearly a third have cut staff and services, Chandler said.

Lawsuits by former employees also have increased.

"Twenty years ago, that wasn't the case. Nonprofits weren't as much sued," Chandler said. "I don't think people are as sympathetic to nonprofits."

The national council holds seminars on risk management, and offers training for human resources staff to help them identify exempt and nonexempt workers.

Employers don't have to pay overtime to exempt workers: executives, managers and specialized professionals.

Identifying those employees can be tricky. An administrative assistant, often a fancy name for a secretary, is not exempt from overtime rules.

Charities frequently are not well-prepared when overtime complaints are made to the Labor Department, Chandler said.

Andrew Frisch, a plaintiff employment attorney with Morgan & Morgan in Davie, said bad economic times also bring out the plaintiffs. As for nonprofits, overtime abuses have been going on for years, he said.

"There is a general knowledge out there that people who work in nonprofits are not doing it generally for the money, and I think some nonprofit employers take advantage of that," he said. "They think they have dedicated employees willing to go the extra mile."

Like Scheve's firm, Morgan & Morgan picks its cases to file against nonprofits carefully.

"It's not like we are filing cases against temples and churches and entities of that nature," Frisch said. "In fact, they are exempt. What we found is that nonprofits get in trouble most of the time when they compete directly with private industry."

Frisch said one case he filed was against a nonprofit running a bingo parlor.

"The guy was working 45 or 50 hours a week for basically a gambling outfit," he said.

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Information from: Daily Business Review, http://www.dailybusinessreview.com