Yahoo CEO Jerry Yang is Entitled to Overtime

The general rule in California is that everyone is entitled to overtime unless they meet one of the narrowly defined exemptions.  This means that many nurses, field service engineers, computer programmers, and IT Engineers, are entitled to overtime pay. But, is it possible that Jerry Yang, the co-founder and CEO of Yahoo could also sue for overtime pay?  Surprisingly, the answer seems to be "Yes."

As surprising as this seems, it does not alter the fact that a person must meet all of the requirements of an exemption in order to be exempt from overtime.  While certain exemptions do not require that an employee be paid on a salary basis (such as interstate truck drivers and outside salespersons), others do.   In this case, it is not likely that Mr. Yang would qualify as an interstate truck driver or an outside salesperson, so the company would probably rely on the Executive Exemption -- he is, after all, the CEO.  However, this exemption requires, among other things, that the employee be paid on a salary basis of at least two times minimum wage.  Currently, this amounts to $640 per week.  If you make less than this, you simply can not be exempt from overtime under the Executive Exemption.    

Even if you make more than $640 per week, problems frequently arise when the employer makes illegal deductions from your paychecks.  For instance, if you have money deducted from your pay if you work less than 8 hours in a day or you are not paid for company holidays, you will not be seen as being paid "on a salary basis," and the exemption will not apply to you no matter how many people you supervise.

So, why is Mr. Yang entitled to overtime?  In a recent article on Jerry Yang's pay, it was reported that Mr. Yang only receives a salary of $1 per year.  As such, he does not meet the minimum salary requirement for the exemption, so he can not qualify for that exemption. 

It should be noted that Federal Law has an exemption for people who own more than 20% of a business.  This exemption does not require that a proper salary be paid.  However, Mr. Yang only owns 3.9% of Yahoo.  While this may make his net worth about $1.5 Billion, it still means that the exemption does not fit.   Fortunately for Mr. Yang, this means that he would also be entitled to liquidated damages on any unpaid overtime.

Some may consider this an interesting academic argument because Mr. Yang is unlikely sue for unpaid overtime and minimum wage violations.  However, with the Private Attorney General Act of 2004, it turns out that anyone who works at Yahoo can sue for civil penalties on his behalf -- as long as that person suffered at least one labor violation.  As such, if a IT worker at Yahoo is not paid overtime, not only can he sue for his own overtime, but he can sue for civil penalties for Mr. Yang not being properly paid his overtime.  Given that in addition to overtime violations, there are also minimum wage violations, pay check stub violations, meal break violations, and record keeping violations, the amount of these civil penalties could add up quickly.

In a recent case, my office used the Private Attorney General Act to sue on behalf of various computer programmers who were not paid overtime even though my client was not a computer programmer.  The Defendant tried to have the claims thrown out, but the Judge allowed them to stay in. (Attorneys who would like copies of the briefs can contact me.)  It will be interesting to see how the case ultimately develops, but the Private Attorney General Act does seem to offer some promise in addressing labor violations in which the victim is unlikely to actually sue.  While the case about Mr. Yang is illustrative of how the law might be used, the more practical applications that we are using it for is to sue for unpaid interns and other low paid employees who are either afraid or unwilling to assert their own rights to be properly paid.

For attorneys reading this, you should also note that I have used the salary basis issue to get overtime for contract attorneys.  There is an interesting issue about whether these attorneys are also entitled to liquidated damages, but I have never been able to test this out out, as these cases have all settled very quickly.

Comments

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Even the CEO experiences this issue, good thing that there is the act for programmers for such overtime/wages issues. I read the other blog,very informative for the fast growing society if information technnology.

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I've been asked to work a 12 hour shift on a holiday. I was told the pay is 1.5 times regular pay for the full 12 hours. Isn't there a differential for time over 8 hours, even on a holiday?

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However, with the Private Attorney General Act of 2004, it turns out that anyone who works at Yahoo can sue for civil penalties on his behalf -- as long as that person suffered at least one labor violation. As such, if a IT worker at Yahoo is not paid overtime, not only can he sue for his own overtime, but he can sue for civil penalties for Mr. Yang not being properly paid his overtime.

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