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March 2013: Madia Law Files Overtime Class Action Lawsuit Against Regency Beauty Institute

The Fair Labor Standards Act (“FLSA”) is a federal law that, among other things, prohibits employers from failing to pay overtime to its employees and attempting to avoid paying overtime by classifying employees as “salaried” who should, by law, actually be paid for each hour worked.  For such employees, time worked over forty hours must be compensated at time and a half.  Minnesota also has a version of the the FLSA under its own state laws.

On February 18, Madia Law filed a class and collective action lawsuit in federal court against Regency Beauty Institute (a national for-profit cosmetology school) on behalf of employees in Regency’s admissions department who were: (1) initially misclassified as “salaried” employees, (2) were not paid for time worked over forty hours during the misclassification period, and (3) after they were properly classified as “hourly” employees, were required to work off the clock so Regency could avoid paying them overtime wages.

 

On Friday, Madia Law also filed a motion for conditional class certification (available here), which United States District Court Judge Donovan Frank will hear in early June.  The following includes a summary of the allegations contained in the filings.

Regency Beauty Institute (“Regency”) charges students an annual tuition of approximately $20,000.00.  Regency has eighty-nine campuses across the country and is the second largest cosmetology education business in the United States.  

Regency employs individuals in its admissions department to prospect for and recruit new students.  Admissions employees make telephone calls and follow up calls to prospective customers in an attempt to convert them into Regency students; they recruit new students by calling through lists of prospects, giving a set speech about Regency to prospects who answer their calls, and attempting to arrange campus visits for interested prospects. Regency sets rigorous recruitment goals and monitors almost every moment of admissions employees’ time to ensure satisfaction of those goals. In essence, the admissions department is Regency’s sales department.

Through 2010, Regency required their admissions employees to work 45-55 hours per week, sometimes more, in order to meet constantly increasing recruitment goals. Regency avoided paying overtime compensation to these employees by misclassifying them as salaried employees.

In November 2010, Regency’s Vice-President of Human Resources announced that Regency would be implementing a time clock system that all hourly employees, including admissions employees, would need to use to log their hours. Several representatives pointed out that they were salaried employees, not hourly. Regency’s Vice-President of Human Resources responded: “No. You’ve always been hourly employees. Always.”  When employees then protested and inquired regarding back pay for their overtime hours, Regency’s supervisors and leadership responded, “You don’t want to go down that road.”

After installing a time clock in January 2011, Regency has continued to avoid paying overtime by requiring admissions employees to work prior to clocking in, after clocking out, on nights, and on weekends. Regency instituted a policy whereby its employees were not allowed to clock in or out more than 5 minutes before or after a scheduled shift, despite it’s knowledge that it’s employees were working – sometimes for hours – before and after their shifts on Regency’s premises.

Madia Law is representing current and former admissions employees in a class and collective action lawsuit to recover payment for past unpaid wages and to bring light to Regency’s practices.