Source: CCH ONLINE

A class action lawsuit filed April 20, 2005, in Dallas accuses Blockbuster Video of intentionally refusing to pay overtime to a large number of its office employees. The suit was filed in the midst of a board proxy fight with financier Carl Icahn and on the heels of a wave of recent setbacks, including a $630,000 settlement of a different class action for misleading consumers in its "No More Late Fees" campaign, a failed merger with Hollywood Video, and the announced layoffs of 20% of Blockbuster's corporate staff from its Dallas and McKinney offices.

The suit, filed by a former employee on behalf of numerous current and former employees, alleges that Blockbuster told certain employees that they were not entitled to recover for overtime they worked.
Under federal law, merely paying an employee on a salary basis instead of hourly does not deny the employee a right to overtime. Instead, unless an employee falls within one of the narrow categories outlined by law, even a salaried employee is entitled to extra pay for hours worked over forty.

Last year, the Bush administration implemented new regulations governing what employees are entitled to overtime. According to the suit, Blockbuster converted a large number of employees from salaried to hourly in August 2004, telling them in meetings, memos and publications that they were entitled to overtime only under the new regulations.

Blockbuster did not tell its employees, the suit claims, that the converted employees had been entitled to overtime before the new regulations. Blockbuster began paying employees only for overtime they worked after August 2004, leaving uncompensated, the suit contends, all overtime worked before the conversion.

Blockbuster again tried to mislead its employees, the suit claims, by soliciting releases from newly laid off workers that would appear to surrender the employee's right to pursue the overtime Blockbuster owes without conforming to the law on the release of wage claims.

The suit seeks to recover overtime wages for hours worked by all employees who were converted from salaried to hourly in Blockbuster's corporate offices in Dallas and McKinney. Because Blockbuster intentionally misled its employees regarding their overtime rights, the suit claims, each employee is entitled to recover double the amount that Blockbuster should have paid in the three years leading up to the August 2004 switch.

The class of employees is represented by Matt Hill, a Dallas employment lawyer representing employees in wrongful termination, sexual harassment, non-competition, and overtime suits.