Plaintiffs’ lawyers who specialize in major class action lawsuits
are targeting compliance with the wage and hour laws. These class
action cases typically involve claims on behalf of large numbers
of employees. Among recent developments, for example, Albertson’s
Inc. has settled a wage and hour case involving as many as 150,000
current and former employees; Taco Bell Corp. is litigating a case
involving an estimated 14,000 workers in Oregon, having settled
an earlier case with an estimated 16,000 workers in Washington;
and Corporate Express recently settled a wage and hour case for
a reported $9.75 million. It is clear that the class action lawyers
are hard at work to find and file more of these cases.
The reported activity so far has been concentrated on employers with large
and relatively lower-paid workforces, both in the private sector (such as
retailing, grocery and food service/hospitality) and in the public sector.
But, recent trends indicate that the class action lawyers, and sometimes
the unions, are looking for potential cases in virtually any area where
overtime for a group of employees can be put in question.
Federal and State Courts
Wage and hour class cases can be brought in federal court or in state
court. In federal court these cases are brought under the Fair Labor
Standards Act (FLSA), although state law claims may be added to the FLSA
claims. The procedural rules for federal claims in FLSA class litigation
differ significantly from other types of class actions. In an FLSA class
case, individual current and former employees join the case by filing an
“opt-in” consent notice with the federal court. In most states a wage and
hour class action covers all current and former employees within a
court-certified class, unless individuals decide to “opt out” of the case.
In both the federal and state courts, however, the plaintiffs may only
have to make a relatively modest showing of individual violations in order
to shift the burden to the employer defendant. And, if the employer claims
that employees are exempt from an overtime requirement, the employer
usually always has the burden to prove the validity of the exemption.
Litigation Targets
Where do these cases come from? While it is difficult to generalize or
give a complete description, the following areas have attracted attention
in recent cases. Executives/managers, administrators and professionals
often are treated as exempt from wage and hour overtime requirements.
Class action lawyers typically attack these claimed exemptions on the
basis that notwithstanding the nominal duties and salary status of the
position, the employees’ actual duties, or deductions made from their
salary, make them non-exempt. For hourly employees in particular, the
class action lawyers often look for work “off the clock,” meaning work
that is not recorded at all for wage payment or is ignored when computing
overtime. Other cases are attacking private sector use of “comp time” off
in lieu of overtime, as well as compliance with state law requirements for
additional overtime pay, meal periods, and rest periods or breaks.
Preventive Steps
So what should an employer do? First, updating and implementing a solid
compliance program is essential. Even if there are still some individual
violations, the compliance program can be used to trim the size of the
alleged class, and to defend against allegations of willful violations and
the assessment of liquidated (double recovery) damages. Conversely, the
class action lawyer to establish willful violations and to obtain
liquidated damages can use proof that an employer had a compliance program
and did not follow it.
If an employee complains about wage and hour compliance, handle the
complaint carefully. Finding a disgruntled employee is the essential first
step for a plaintiffs’ lawyer. Further, federal and state law prohibit
retaliation against employees who makes a wage and hour complaint, and
punitive damages may be awarded to a victim of retaliation. A wage and
hour complaint or lawsuit may draw attention to a compliance issue, such
as a compensation practice or policy. In addressing that issue on a going
forward basis, care must be taken to avoid conceding liability (such as by
treating similarly situated employees differently) or creating records
that the plaintiffs’ lawyer can obtain and use to prove the case.
Finally, wage and hour class litigation usually is lengthy, complicated
and expensive. The litigation process also places heavy demands on human
resources personnel and employer records systems. Although it will seem
self-interested given our extensive experience in defending wage and hour
class actions, we believe that it is objectively fair to recommend that
you select counsel, particularly for larger cases, who knows what they are
doing in this area.
Robert P. Davis is a partner in the Washington Office of the Mayer,
Brown & Platt law firm (www.mayerbrown.com).
He is defending several large wage and hour class actions around
the country. Contact Bob directly at rdavis@mayerbrown.com.
Copyright 2000 Mayer, Brown & Platt
