Did Florida Appliance Retailer File Bankruptcy to Avoid Overtime Pay Judgment?

Melbourne, FLHe may be known throughout the Sunshine State for banging his fists against appliances and proclaiming that you paid too much, but for former employees of Appliance Direct, Sam Pak allegedly didn't pay enough. An overtime pay dispute involving the retailer has surfaced in Florida.

But the case is more complicated than it seems.

According to the November 6th issue of Florida Today, a collection of 31 former delivery drivers, who were at one time in the employ of Appliance Direct, recently won a judgment in federal court totaling $126,000 for unpaid overtime. However, it has been reported that they, together with 12 additional drivers, have filed a motion in bankruptcy court against GROJ of the West Inc., an enterprise formerly doing business as Appliance Direct Inc.

The disgruntled former employees claim that company officials changed the name of the enterprise, followed by a filing of bankruptcy protection against select creditors allegedly to avoid honoring the judgment.

The judgment was against Appliance Direct Inc.

The pay for overtime matter has its roots in 2008, when lead plaintiff Yervant Cox and 30 other drivers formerly working for Appliance Direct filed a judgment in federal court under the Fair Labor Standards Act (FLSA) alleging the non-payment of thousands of dollars in overtime.

The owner of Appliance Direct, Pak, reportedly agreed to pay the accrued overtime and the drivers received a judgment, in March of this year, for $126,000.

Two months later, on May 28, Appliance Direct Inc. changed its corporate name to GROJ of the West, with Pak signing a voluntary petition for liquidation the same day.

Lawyers for the plaintiffs in the overtime-laws dispute claim that the defendant changed the name of his firm to avoid paying the judgment—although Pak is said to have stated during his bankruptcy hearing that he was changing the name to avoid undue publicity.

Lawyers representing Pak say the plaintiffs won a judgment against the wrong entity, and say that GROJ of the West and Appliance Direct Inc. should not be confused with the Appliance Direct enterprise. It was stated that the company that filed for bankruptcy is a separate corporate entity, established to sell appliances online, but failed when the business model didn't work.

The Appliance Direct chain is one of the largest appliances dealers in the state. Pak is well-known throughout central Florida for homemade cable TV commercials.

Overtime rules exist to ensure employees are paid their due for any hours worked in a week over and above the number of hours identified as representing a standard workweek. Laws on overtime give employees some recourse for compensation. Most employers would rather not have to pay overtime—which often can't be forecast—if they can get away with it.