Ex-Employee Settles Lawsuit, But Still Bitter

May 20, 2010

“Thanks Apple, for ruining my life.” That’s the message from former Apple Genius Kenyon Zahner, who spent eight months working at The Galleria (Fort Lauderdale, FL) retail store, and who is now unemployed, living separately from his wife in Costa Rica, suffering from high blood pressure, and unable to bring his 18 month-old son or his wife back to the United States to live. This low point in Zahner’s life follows a lawsuit he filed against Apple for unpaid overtime pay, settled last December for just $3,500, of which $2,300 went to his attorney. Now Zahner is looking for some measure of extra-legal revenge against the employees at the store who he claims forced Geniuses to routinely work “off the clock,” denying them legally-required overtime pay. He also claims the employees trumped-up reasons to fire him after he complained of the practice. In the lawsuit, Apple’s attorneys denied there was any pressure to work unpaid overtime, and said Zahner had not presented any proof he was owed money. Yet, in the settlement agreement revealed here for the first time, the company ended up paying Zahner and swearing him to secrecy about the deal.

Interviewed by e-mail in Costa Rica, Zahner feels exploited by The Galleria store’s assistant manager, and he’s willing to name names. Why?

“The short answer is that I and the rest of the Genius Team were exploited by the assistant manager (AM),” Zahner says, giving that person’s name. IFO has chosen not to publish the assistant manager’s name, since he/she was not named in Zahner’s lawsuit. “When I made this known (to Apple), I was summarily terminated after a case was ‘created’ against me.” He notes that a Google search of his name now fills 15 pages, all related to his lawsuit, and that at least one prospective employer didn’t hire him because of those listings.

New Job

According to Zahner, he graduated from the University of North Carolina–Chapel Hill, and then worked as an editor at WRET-TV (Charlotte), which was owned by Ted Turner prior to his founding of CNN in 1980. Zahner later moved to a similar position at the CNN Bureau in Los Angeles, and then transitioned to a 23-year career in the motion picture and television production industry, and computer consulting and software development.

He moved to Costa Rica, where he met and married his wife in 2005. Two years later they had a son. “We wanted to relocate back to the U.S.,” Zahner says, and so he moved alone back to Ft. Lauderdale to earn enough to bring his wife and son to the United States. He worked on the Geek Squad for Best Buy before being offered a Genius job at The Galleria Apple store in Oct. 2008.

“By anyone’s account I would be considered an ideal employee,” Zahner says. “I was never late or sick. I helped thousands of customers at the Genius Bar with an almost perfect NPS score of 100 percent.”

The term “NPS” stands for “Net Promoter Score,” and is based on the survey responses of customers to the question, “Would you recommend the Apple store to a friend?” Apple’s overall NPS score for its retail stores is 78 percent, a very high score among the seven industries surveyed by the company Satmetrix during 2009.

“I always gave over 110 percent in all my interactions with customers and fellow employees,” Zahner says.

When he was hired, The Galleria location was short-staffed, Zahner says, but he always expected that additional Genius positions would be filled soon. “I quickly learned that this understaffing had been going on for a number of months,” Zahner says.

His typical work schedule at the Genius Bar was from 12:30 p.m. to 9:30 p.m., with an hour off for lunch. The work of assisting customers began immediately when he arrived for work, he recalls, and didn’t stop when the store closed at 9 p.m.

“We always had standbys for iPhone repairs and sometimes computers,” Zahner says. “I never refused service to anyone. I was almost always multitasking, working with two, and sometimes three to four, customers at once while still maintaining almost 100 percent customer satisfaction.”

The Genius Bar’s routinely-busy workload was made even busier through the actions of the assistant manager (AM), one of three at the store. Zahner says the AM always gave female customers special attention: when a woman would come into the store without a reservation for a product problem, “(AM) would steer her over to the Genius Bar and make sure the woman received immediate attention,” Zahner says. “He/she continually wanted to be the center of attention,” what Zahner calls a “frustrated actor.”

“He/she managed by power and fear.” — Zahner

He describes the AM as a “flake” who made sure everyone knew he/she was “the boss.” After the original manager moved to another store, the AM implied to Zahner that he/she was the new manager. “He treated me and most other employees as if we were just out of high school,” Zahner says. “He/she managed by power and fear.”

The AM pressured all the Genius Bar employees to sell MobileMe, Zahner says. “In the big picture, I believe he/she was only trying to make his productivity numbers look good to attempt to advance within the company.” Sales of Apple Care, MobileMe and other add-on products are used to create an “attachment” rating that is used as one element of personnel and store evaluations.

Zahner recalls the hectic pace of work. “If we were lucky at the Genius Bar, we would be finished will all the customers by 9:10 to 9:20,” Zahner says. At that point, Zahner and another Genius had to clean up and organize the workspace, replenish printer paper and secure replacement inventory. They also had to organize, sort and file the daily paperwork for the day’s work, complete final daily reports and e-mail the results. Lastly, they had to clean up and organize the Genius Room in the back-of-house.

On top of all this, “We were also supposed to check our company email, stay current on the latest company policies, technology changes/updates and any procedural changes,” Zahner says. “With many times only 10 minutes or less left during my assigned shift, it was humanly impossible to accomplish this workload without working off the clock, which was encouraged by immediate management,” he claims.

Off the Clock

State and federal labor laws require employers to pay employees for all their job-related work time, and to pay employees extra for work beyond 40 hours in a work week. Requiring, encouraging or otherwise making a practice of working without pay, or “off the clock,” is illegal, since it avoids paying overtime pay, which is required by federal regulations to be one and one-half times the employee’s usual rate.

Employers might use the off the clock practice to reduce the amount of wages they pay. They would also benefit from not having to pay additional benefits, such as unemployment and medical insurance fees, and Social Security contributions.

Determining what is “job-related” work is sometimes difficult. Preparation for the job, such as putting on uniforms or special equipment, is legally considered to be part of work time. Likewise, end-of-shift activities can also be considered work time, such as clean-up, equipment shut-down or work hand-off to the on-coming shift. Work for a company away from the workplace can also be considered work time in some situations.

Zahner claims, “It was understood and encouraged by my fellow team members and Lead Genius to work off the clock to get our expected work done.” He says that the Lead Genius was constantly working off the clock, “even working from home on his days-off to send e-mail correspondence and make our new schedules.”

The work situation was complicated by the lack of a store manager right after Zahner was hired. When he encountered this pressurized work environment, “I had no one to speak to about working off the clock above the manager” for about a month until a new store manager was hired in Nov. 2008. Zahner names the new manager, but again, IFO is not naming that person because he/she is not named in the lawsuit Zahner filed.

At first the new store manager was sympathetic to the burdensome workload at the Genius Bar, Zahner says. “But (he/she) soon sided with the assistant manager and a case was quickly made against me to support termination.”

The manager had come to Apple from a non-tech career path—the person had worked in management positions at Williams-Sonoma, L’Oreal, Gap Inc., Chanel and Benetton. Apple frequently hires store managers who have not previously worked in an Apple store, various sources say, and who have no specific technology experience.

After the manager was hired, additional Genius positions were filled, Zahner acknowledges, “But we were still understaffed.”

“It was a very negative environment.” — Zahner

Zahner admits that he never contacted anyone above the store manager about the overtime issue, including the company’s Human Relations department. “It was a very negative environment,” Zahner explains. “Everyone seemed scared of the AM. Because I was relatively new to Apple and there was no one else above (the AM) at the time, I waited for (the new manager) to come in as store manager.”

“I don’t like to cause problems for other people,” Zahner explains, “and always give people the benefit of doubt. In the situation at that time I did not feel it would be in anyone’s best interest to go to Ron (Johnson, Sr. V-P Retail) or anyone else. I waited to see what (the new manager) would do, which maybe was a mistake on my part.”

Zahner says his termination was sealed by planned, two-day downtime for the chain’s computer system in May 2009. All transactions had to be recorded manually during the outage, and then hand-entered into the system when it came back up. “It took most of the next week to sort out all the errors everyone had made, and create and correct the paperwork from this downtime,” Zahner says. “These errors were used as the final piece in the case against me for termination.”

Zahner believes that a co-worker changed some of the customer documentation to create errors that were then used to justify his termination, and he claims that other co-workers witnessed those changes being made.

During all this, his e-mails to the store manager about his situation went unanswered.

The FLSA prohibits firing or discriminating against an employee who files a wage complaint or a lawsuit. However, in Zahner’s case, he was fired before he made a formal complaint about the overtime practice at the Apple store.

“In my opinion, this working off the clock situation did not need to occur,” Zahner. “Apple had and still has no financial problems that would require exploitation of its employees.”

The extreme workload at the Galleria Genius Bar was obvious to everyone at the store, Zahner says, but apparently not to the manager or team leader. “It could have been easily corrected by simply adjusting our schedules, hiring more Geniuses, limiting or eliminating standbys and other means but there was no desire to do so,” Zahner says.

“I do not blame Apple as a company,” Zahner says, contradicting some of his other statements. He describes himself as one of the original Mac “addicts,” having purchased an original Macintosh three weeks after the computer first went on sale in 1984. “I have personally owned almost every make and model Mac, even a couple of clones,” he says.

When his termination became inevitable, Zahner says he began looking for other jobs, “but given the economic conditions at the time, it was nearly impossible to find another job quickly. I had no more money left, so I had to return to Costa Rica.”

He says the entire adventure was stressful, and his systolic blood pressure shot up to over 200 (normal is about 100-130). “I visited two different cardiologists but was unable to successfully control my blood pressure with medication,” he says. “I have probably suffered permanent heart damage as a result.”

He blames the medical issues on stress in the workplace. “I was concerned about losing my job and providing for my family,” Zahner says. The U.S. economy was tanking and he didn’t see many other job opportunities. “Had the economy been better, I probably would have resigned,” he says.

Zahner had used his life savings to relocate to back to Florida for the Apple store job, so now life it tough. “My marriage is now in jeopardy—my wife and I are currently living separately,” Zahner says. “I may lose my house from being unemployed for over nine months now.” Unemployment in Costa Rica is above 20 percent, he says, so his prospects for a new job are slim.

More poignantly, Zahner say, “My son may never learn English as his native language.”

The Lawsuit

After he was fired, Zahner approached an attorney about the overtime pay situation. The attorney believed the “off the clock” situation might be affecting many other Apple employees and potentially involve millions of dollars. The attorney agreed to tackle the case on a contingency basis, taking his fee from any damages the court might order Apple to pay.

The complaint that Zahner’s attorney filed in the U.S. District Court in Aug. 2009 was just three pages long, and made its point quickly. “That during Plaintiff’s employment, Defendant required Plaintiff…and others similarly situated, to work in excess of forty (40) hours per work-week, and willfully refused to property compensate Plaintiff…for all such work pursuant to the FLSA (Fair Labor Standards Act).” [Download a collection of the lawsuit court documents.]

The lawsuit noted that Zahner’s work records were in Apple’s possession, and therefore Zahner could not calculate the exact amount of overtime that he was due.

Apple denied all the allegations in a filing with the court, saying no other employees were “similarly situated,” but admitting that it did possess Zahner’s work records.

The class-action nature of the lawsuit soon evaporated, and by Sept. 2009 Zahner’s attorney submitted an estimate of his client’s unpaid overtime pay—a total of two hours per week for “6.5 months,” or what the lawsuit says is 28 weeks. At Zahner’s $16 an hour wage rate (or $24 per hour for overtime), the lawsuit asked for $1,344.

Apple filed an answer to Zahner’s claim 56 hours of unpaid overtime, saying, “Apple disagrees that Plaintiff is due any overtime wages at all.”

The company said that it has “well established policies and procedures in order to ensure compliance with the Fair Labor Standards Act.” All employees must report all hours worked, the company said in the filing, including overtime. “In addition, Apple has a longstanding policy prohibiting employees from working when they are not on the clock.”

The company added, “Apple’s policies and procedures are in place and well distributed to ensure that all employees are paid for all of their hours worked,” the filing states, and said it “often” sends time and attendance reminders to employees restating these work policies.

In fact, federal Department of Labor regulations require covered employers to post notices in a “conspicuous place,” setting out the regulations pertaining to the minimum wage, child labor laws and overtime pay rate.

Lastly, Apple’s answer to the lawsuit said that Zahner had produced no evidence to support his claim of damages, and no evidence to support that Apple had violated the FLSA.

Agreement Revealed

Within three months, the attorneys for both sides had agreed to negotiate a settlement. They filed a formal notice to the court of the settlement on Nov. 18, 2009. Within a month the attorneys had crafted an agreement (pdf) that would pay Zahner damages and his attorney’s fees.

The final Zahner–Apple agreement provides a rare view of a usually-secret document. It also demonstrates the extent to which a defendant in a civil lawsuit attempts to cover all past and future possibilities, all while not admitting wrongdoing or guilt.

The agreement appears to have been crafted by attorneys at Morgan Lewis & Bockius LLP, Apple’s outside attorneys in Florida. The agreement was then forwarded to Zahner and his attorney for signing. A copy of the final, signed agreement was filed electronically with the federal District Court by an associate attorney for Apple’s law firm on Dec. 28, 2009, along with a formal request for the assigned judge to approve the settlement and dismiss Zahner’s lawsuit.

The federal court system’s electronic document filing system is called PACER. Documents posted on PACER are available for viewing and download by any registered user, and are considered “public.” The agreement was downloaded as a PDF file from PACER for this story, and at this moment remains publicly posted on the PACER Web site.

Lawsuit agreements are routinely kept confidential, but it’s not clear why this one was filed by Apple’s own attorney without being flagged for privacy.

Attorneys for both Apple and Zahner did not respond to e-mail requests for comment on the lawsuit or the settlement agreement.

No Guilt, No Liability

The six-page agreement (pdf) that Zahner signed is very comprehensive. It covers Apple’s payment of $3,500, future employment, criticism of the company, release of liability, use of lawsuit information, confidentiality, non-admission of law violations, and various legal stipulations. The agreement was signed by Zahner on Dec. 13, 2009, and by Apple’s Director of Employment Law, Deborah Rice, five days later.

Among the notable provisions of the agreement is that Apple denied all of the original lawsuit’s allegations and any liability.

The agreement set out the mundane topic of how the payments would be made, saying they would be delivered to Zahner’s attorney as three separate checks. Apple would submit an IRS W-2 tax form for $600 of the payments paid as income, and a Form 1099 for the $600 reported as damages. Zahner was obligated to submit a Form W-9 to Apple reporting his Social Security number.

The dual $600 payments may originate from the FLSA regulations, which allow lawsuits for back pay, and an equal amount for so-called “liquidated damages.” The FLSA also allows attorney’s fees and court costs.

Had Zahner made a formal Department of Labor complaint, and had that complaint been sustained as willful, the violation could have brought a fine of up to $10,000 against Apple.

The agreement continues, “Apple Inc. will not be obligated to employe Zahner under any circumstance.”

Pointedly, Zahner agreed not to “criticize, denigrate, or disparage the Company regarding conduct that occurred in regards to this lawsuit.” Zahner justifies his now-public accusations and that condition by saying, “I believe that the clause is subject to broad interpretation.” He adds, “Apple may try to retaliate legally but it will be difficult for them to do anything to me here in Costa Rica.”

A very long paragraph sets out that Zahner released Apple from any liability and claims related to a long list of Florida and federal regulations and laws related to labor, wages, whistle-blowing, retirement and even the Florida State Constitution.

Another long paragraph states that Zahner agreed to keep the settlement negotiation, terms, amount and even the existence of the agreement “completely confidential,” except to his attorneys and immediate family members. If asked about the lawsuit, Zahner agreed “to simply state that the claim was resolved to the satisfaction of the parties.”

Lastly, the agreement notes that if Zahner breaches any section of the agreement, “Defendant will be entitled to a return of the monetary consideration provided for in this agreement, as well as any further relief the court deems appropriate.” Again, Zahner believes his residency in Costa Rica offers him some protection from this condition.

Now What?

Was it worth it to sue Apple? Zahner explains, “The damage had already been done to me personally and physically and I really did not have to do anything with the actual legal proceedings—so why not?”

He sums up his experience by saying, “I am not a vindictive person. I think for whatever reasons, circumstances and timing created the situation I found myself in with Apple.”

As for the employees who he blames back at the Galleria Apple store. “It will be interesting to see what happens—if anything—to (them) as a result of my information. I believe it ‘all comes out in the wash.'”

“Oh—I almost forgot. On a positive note, I did get quite a few T-shirts,” Zahner says in an e-mail that came from the Web address: appleruinedmylife@xxxx.com.

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