Overtime Case Against Dental Firm One of State’s Biggest

In one of the largest overtime pay cases brought in California, federal officials are alleging that a big Newport Beach denture maker cheated employees out of almost $1.5 million.

The Labor Department claims that since October 1993, Glidewell Dental Ceramics Inc. has failed to pay overtime to about 300 workers, mostly dental technicians who are paid a weekly rate and a bonus based on productivity and the quality of their work.

But the company, one of the nation’s largest dental labs, vigorously denied the allegations. And half the 300 employees who the Labor Department says are owed back wages have signed statements in support of the company.

Moreover, Glidewell’s politically connected attorney has complained about investigatory tactics to several lawmakers in Washington, who are pressing the Labor Department for answers.

“I am flabbergasted,” said Roger H. Schnapp, Glidewell’s lawyer and an appointed member of the department’s business research advisory council. Government officials haven’t furnished proof of violations, Schnapp said, despite a lengthy investigation that has included late-night calls to employees.

William C. Buhl, regional administrator of the Labor Department’s Employment Standards Administration, said the government has 20 sources who have confirmed the overtime violations. Since last fall, labor inspectors have examined time cards, interviewed workers and conducted surveys of employees. “We’re confident enough to file suit,” Buhl said.

Attorneys for the two sides met this week for the first time since the lawsuit was filed in federal court in Los Angeles late last month, but prospects for a settlement are unclear.

If the case goes to trial, one major issue will be the status of dental technicians. Schnapp said technicians at Glidewell should be exempt from overtime requirements because they are skilled workers. He added that Glidewell operates around the clock, with employees working on flex time and often taking long breaks between tough assignments.

But the Labor Department says that although the work requires some skills, much of what technicians do is manual labor. Also, federal officials say that, except for certain professionals such as lawyers and doctors, most workers must be on salary and have supervisory duties to be exempt from overtime rules.

The weekly pay for technicians at Glidewell varies widely. Schnapp said the average is between $800 and $1,000 a week, although some earn as much as $3,000 a week. But the Labor Department claims that 40% of Glidewell’s workers earn less than $12 an hour--hardly the kind of pay that professionals earn, Buhl said.

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Glidewell representatives have repeatedly asked the government to reveal its 20 witnesses, but Labor Department officials have refused, saying their policy is to keep their sources confidential to prevent repercussions. The names would be released in pretrial proceedings.

One government witness has come forward: Arcangel Tovali of Norco, a former Glidewell employee.

In an interview, Tovali, 36, said he routinely worked 60 or more hours a week at Glidewell. (Under federal law, most employees are entitled to time-and-a-half pay after 40 hours of work a week.)

But Tovali said he put down 40 hours on his weekly time sheet. The reason? Managers told him and others to do so, he said.

Tovali said he earned a base rate of $10.75 an hour, plus a bonus based on the number of units he completed. His weekly pay averaged $500, he said.

Schnapp, however, dismissed Tovali as a “totally incredible witness.” Tovali was fired and then subsequently was denied unemployment compensation, Schnapp said, because he had falsified his time card at Glidewell. Tovali said he was only doing what managers told him to do.

Schnapp said the government has based its case on 20 “secret sources,” despite 150 employees who signed a statement saying they have not worked overtime.

The statement, copies of which were distributed at Glidewell for signatures and then delivered to the Labor Department by Schnapp, says in part: “Let me make this perfectly clear. I do not work over 40 hours now, nor have I worked over 40 hours during the past two years.”

Buhl responded: “Well, we have evidence they did work overtime.”

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Glidewell Dental is owned by James R. Glidewell of Newport Beach, who started the business with one worker in 1970. With the help of a federal Small Business Administration loan in 1993, the company has grown substantially in the last few years. Its annual sales are $37 million, and it employs about 500 workers with facilities in Newport Beach, Riverside and Lake Havasu City, Ariz.

Glidewell, 51, declined to comment.

Upon Schnapp’s request, Rep. Christopher Cox (R-Newport Beach) along with three U.S. senators have written Labor Secretary Robert Reich expressing their concerns about the Labor Department’s case against Glidewell.

Buhl said the department has responded to their inquiries, adding, “We can’t be influenced by who somebody knows.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Who Gets Overtime

State and federal laws determine who gets overtime and when employers are required to pay it. Employees are grouped as exempt from wage and hour laws or nonexempt; those who are exempt do not receive overtime pay. Category definitions:

EXEMPT

Salaried employees with advanced knowledge or education. Must be paid at least $250 per week.

* Executives: Primary duty is management; direct the work of two or more full-time employees; have the authority to hire and fire or make recommendations regarding employment status of others; exercise a high degree of judgment; do not devote more then 20% of time to non-management functions (40% in retail and service establishments).

* Administrators: Perform office or non-manual work related to management policies or general business operations; regularly exercise discretion and judgment; either assist proprietor or executive, perform specialized or technical work, or execute special assignments; do not devote more than 20% of time to work other than that described above (40% in retail and service establishments).

* Professionals: Perform work requiring advanced knowledge and education, work in an artistic field that is original and creative, or work as a teacher; regularly exercise discretion and judgment; perform work that is intellectual and varied in character, the accomplishment of which cannot be standardized as to time.

* Examples: Doctor, attorney, engineer, accountant, teacher

NONEXEMPT

Employees whose duties require less training and little or no administrative or managerial duties, regardless of whether they are salaried or paid by the hour.

* Examples: Office clerk, legal secretary, paralegal, bank clerk, switchboard operator, some executive secretaries.

Source: U.S. Department of Labor; Researched by JANICE L. JONES / Los Angeles Times