Los Angeles, CA (PRWEB) May 3, 2006
In May of 2001, Toby Harris, a telemarketing sales rep for Marina Del Rey, CA-based Investor’s Business Daily (“IBD”) made the mistake of thinking that the HR department at IBD was there to protect employees from the company's violations. He rapidly learned that the HR department was there to protect the company from employees reporting violations (Harris et al. v. Investor's Business Daily, Inc., Cal App, Second appellate Division 4 Case Number B178428.)
Quickly demoted, he was then fired shortly after making an internal complaint to the company for illegal wiretapping, surreptitious recording of IBD customers phone calls, and wage deductions from employees paychecks. He then found himself in a legal battle pitted against one of the world’s most powerful billionaires, and had managed to stumble over one of the largest wage and hour violations of this new century, “Earned wage chargebacks.” This is a labor violation so widespread that there could be hundreds if not thousands of corporations nationwide currently doing chargebacks. The violation occurs where corporate losses due to product cancellations and returns are shifted to wage earning employees by skimming earned commissions directly from paychecks by “charging them back” after they have been previously paid to the employee. California Labor code 221 strictly prohibits the practice. It reads verbatim “It shall be unlawful for any employer to collect or receive from an employee any part of wages theretofore paid by said employer to said employee.”
Harris next retained Century City solo practitioner Eric Epstein, an experienced trial attorney, to draft a multi-page demand to the company. William J. O’Neil then did something shocking by appearing in a DMSI (“Direct Marketing Sales, Inc.”) sales meeting, the marketing branch of IBD. O’Neil told the sales staff in sum “Some disgruntled employees were looking for some free money. They would get nothing, and he would fight this to the bitter end should they decide to litigate.”
His attorneys at Silver-Freedman, then issued a 24 page letter to discourage the employees from seeking legal recourse to recover their money, this letter was copied and handed out on the sales floor to all sales reps. Epstein told Harris, “We cannot continue unless we go class action. We need to find class action counsel.” Epstein said he would try calling local Class Action firms. Epstein had given one upbeat piece of information to Harris, an article from the Bureau of National Affairs about an attorney in Northern California named Mark Thierman who had won a recent lawsuit against IKON office supplies for chargebacks. Calls were made to class action firms, including Hoffman and Lazear’s in Oakland, were Mark Thierman also had an office.
After nearly 45 minutes of presenting the case on the speakerphone to Hoffman and Lazear, an Oakland, CA-based class action firm, Mark Thierman asked the question “Can I ask who the company is?” Harris responded, “Investor’s Business Daily newspaper.” There was a gasp from several attorneys on the other end of the phone, “We’ll take it.”
Plaintiff’s legal team filed an extensive complaint against IBD ten months later for illegal chargeback of wages, wrongful termination and failure to pay overtime. Ironically, the same exact overtime argument for inside sales reps developed in Harris et al v. Investor’s Business Daily et al. is now being used with multi-million dollar precision against major wire house stock brokerages nationwide, such as UBS, Merrill Lynch, and Morgan Stanley, which have recently settled for a combined $150 million dollars in overtime violations.
There are many more to come, an estimated $2 billion dollars damages in pending wage and hour cases against the stock brokerage industry, from the same Plaintiff legal team. Harris had unwittingly become the main pawn and catalyst for what may have later sparked to become a potential multi billion dollar legal domino effect within courts nationwide for wage and hour violations.
“For lack of a better analogy, you may recall the old Godzilla movies where every time he fought Mothra by the time the fight was over the city was destroyed," said Harris. It’s similar, only this time the city is a metaphor representing the American Corporations, mainly those in the financial and investment sector. Unfortunately, somebody had to get caught, and IBD was the one that got caught. I doubt this will result in a boycott of his investment products. I certainly hope not. I think O’Neil has good products and nobody wants to turn off a Godzilla fight scene in the middle even if it might be causing some collateral damage.”
Even though IBD managed a victory at the trial court level handing the employees a $547,000 judgment in attorneys fees, a silver lining has appeared for the employees and could set up a national wave in wage and hour litigation. In a recent Los Angeles Court of Appeals opinion, the lower court ruling was reversed and remanded with special direction to the lower court to rule in accordance with the opinion. The opinion seems to lean largely in favor of the employees for the overtime issues and chargeback issues.
“I feel that the American Whistleblower is one of the most important citizens that our society has," Harris said. "There simply is no corporate police force that monitors for corporate violations. It is mainly just left to self regulate and that is a breeding ground for people to get taken advantage of. People are just scared to speak up when it comes to challenging a company policy. This is why companies get away with things like this for decades. You gotta draw the line somewhere and paying an employee one week and then taking the money back the following week, well, that’s the line. It is just wrong. People rely on their paychecks to pay for living expenses. You can’t have employers reaching into employees' paychecks to subsidize ordinary business losses.”