When it comes to employment disputes, every employer thinks “not me.” But no one is immune from this risk – not even celebrity divas.
Lady Gaga is being sued by her former personal assistant, Jennifer O’Neill, for over 7,000 unpaid overtime hours. Although she was paid a $75,000 annual salary, O’Neill is arguing she doesn’t qualify for an “administrative exemption” to overtime requirements in the Fair Labor Standards Act. O'Neill is seeking $380,000 in back pay.
The plaintiff states that during her thirteen months of employment, she catered to Gaga’s every demand and was “figuratively, if not literally, always at her side” for the singer’s recent international tour.
While Hollywood assistants are classically known for slaving to accommodate the divas they serve, their superstar "managers" are still required to comply with FLSA and other relevant employment law. Lady Gaga now must decide to fight this claim in court or reach a settlement, both of which will be costly. Good thing the pop princess was the highest paid female entertainer in 2011, cashing in just over $90 million.
Although you may not want to bring her bold outfits into your workplace, but you can learn from Gaga’s labor dispute and use it to better prepare your company for employment practices liability risks. This case holds relevant lessons for all employers, from startups to celebrity divas.
Know the law. Train your managers on the laws related to day-to-day HR functions like wage and hour requirements, and encourage employees to speak up about any situation in which they feel they’re being treated unfairly. The sooner you can correct a compensation problem, the less expensive it will ultimately be. The back pay, damages, and penalties if it goes to court are likely to far exceed the amount you should have paid an employee in the first place.
A lot of managers assume that if an employee is paid a salary, they are exempt from overtime. The rules aren’t that simple. To be exempt, an employee must be regularly required to use independent judgment and discretion about “significant matters.” In the Gaga case, her former assistant is arguing that her role didn’t fit this requirement.
Other employer actions may also disqualify certain employees from an exemption. If an employee makes less than $23,600 annually, they’re never exempt from overtime. Other actions like cutting an employee’s pay if they miss part of a work day (rather than deducting from a bank of PTO) or reducing the employee’s salary when work volume decreases can disqualify an employee from an exemption as well.
The DOL has more specific guidelines depending on the type of role and industry, so consult your HNI relationship manager or their website if you have questions about a particular role within your company.
In all areas related to HR compliance, it is important to keep organized, consistent records. If a wage and hour issue does arise, it’s essential to be able to point to documentation of compensation practices, job requirements and expectations of employees.
We haven’t heard word on whether Gaga’s record company trained her on HR compliance, but documenting that managers were educated on wage and hour issues can also serve as a mitigating factor in an employment dispute.
Even the best intentions and preparation, employers are always vulnerable to employment practices claims. [Even false allegations can be expensive!]
Employment practices liability insurance is a safety net in the event that an issue arises. Employment disputes come with a high price tag, and can jeopardize the financial stability of many small- to mid-sized organizations. To learn more about EPLI and ways to protect against this risk, click here to download our whitepaper.