wage and hour class and collective action settlement...

Wage and Hour Class and Collective

Action Settlement Strategies Evaluating Settlement Options and Negotiating the Damages Award

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THURSDAY, FEBRUARY 2, 2012

Presenting a live 90-minute webinar with interactive Q&A

A. Craig Cleland, Shareholder, Ogletree Deakins Nash Smoak & Stewart, Atlanta

Rachel M. Bien, Outten and Golden, New York

Douglas Weiner, Senior Trial Counsel, Epstein Becker & Green, New York

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Calculating Potential Damages

in Combined FLSA and State

Law Actions

Rachel Bien

Outten & Golden LLP

[email protected]

The parties have decided to mediate but discovery has only

just commenced – how do the parties estimate damages?

1. Engage in an informal exchange of information*:

a) Payroll data,

b) Time records,

c) Documents reflecting relevant policies or practices,

d) Financial information, if defendant is facing hardship.

*If complete data are too burdensome or costly to produce, a sampling of data is

usually sufficient for settlement purposes.

2. A Rule 30(b)(6) deposition may help to understand the data and

clarify the policies at issue.

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Which Categories of Damages Should I Include?

1. Unpaid wages (in an overtime action)

a) At time-and-a-half or using fluctuating workweek method?

b) Two or three year statute of limitations?

c) On a class-wide basis?

2. Liquidated damages

3. Interest (if available under state law)

4. Attorneys’ fees and costs

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How Does the Settlement Model Affect Damages?

1. What is the scope of the release?

a) Classwide?

b) Opt-in only?

c) General or limited to the claims brought in the litigation?

2. Will there be a claims process or will all class members who

do not opt out receive a settlement award?

3. Who will pay for the cost of administration?

4. Will attorneys’ fees come from the fund or will they be

separately negotiated?

5. Any other bargained for provisions, i.e., confidentiality?

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©2011 Epstein Becker & Green, P.C. All Rights Reserved

Wage and Hour

Class and Collective Action

Settlement Strategies

Douglas Weiner Senior Counsel (212) 351-4770

[email protected]

Wage and Hour

Class and Collective Action Settlement Strategies

• Employees may bring suit under 29 U.S.C.

§216(b) which provides for an employees‘

right to sue an employer for violating the Fair

Labor Standards Act, and the right to

recover unpaid minimum wages, overtime

compensation, and liquidated damages.

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Wage and Hour


• Section 216(b), however, simultaneously

terminates this right upon the filing of a

complaint by the Secretary of Labor in an

action under section 217 to restrain further

delay in the payment of unpaid minimum

wages, or the amount of unpaid overtime

compensation owed under sections 206 and

207.

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Wage and Hour


• Section 216(c) further limits this right by

authorizing the Secretary to supervise the

payment of the unpaid minimum wages or

overtime.

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Wage and Hour


• Section 216(c) goes on to state that

acceptance, by the employee, of such a

―supervised‖ payment in full constitutes a

waiver by the employee of any rights he may

have had under subsection (b) to bring an

action for violations.

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Wage and Hour


• The FLSA was enacted for the purpose of

protecting workers from substandard wages

and oppressive working hours. Barrentine v.

Arkansas-Best Freight Sys,. Inc. 450 U.S.

728, 739, 101 S.Ct. 1437, 1444 (1981).

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Wage and Hour


• Because of the unequal bargaining power between employers

and employees, Congress made the FLSA provisions

mandatory. D.A. Schulte, Inc. v. Gangi, 328 U.S. 108, 116, 66

S.Ct. 925, 929 (1946) (―neither wages nor damages for

withholding them are capable of reduction by compromise‖).

An individual may not relinquish rights under the Act, even by

private agreement between the employer and employee,

―because this would ‗nullify the purposes‘ of the statute and

thwart the legislative policies it was designed to effectuate.‖

Barrentine, 450 U.S. at 740, 101 S.Ct. at 1445 (quoting

Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 707, 65 S.Ct. 895,

902 (1945)).

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Wage and Hour


• The FLSA provides only two avenues for settlement.

Lynn’s Food Stores, Inc. v. United States, 679 F.2d

1350, 1353-54 (11th Cir. 1982). First, under section

216(c) , the Secretary of Labor can supervise an

employer‘s voluntary payment to employees of

unpaid wages. 29 U.S.C. § 216(c). An employee

who accepts such supervised payment waives his

right to file an action for both the unpaid wages and

for liquidated damages.

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Wage and Hour


• Or, under section 216(b), an employee can bring a

private action for back wages under the FLSA and

can ―present to the district court a proposed

settlement, [and] the district court may enter a

stipulated judgment after scrutinizing the settlement

for fairness.‖ Lynn’s Food Stores, 679 F.2d at 1353.

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Wage and Hour


A federal court recently described an FLSA case as

follows:

―Plaintiff was employed by Defendant . The parties

disagree on whether Defendant compensated

Plaintiff correctly. This disagreement is irrelevant

because, as admitted by the Defendant, the United

States Department of Labor (―DOL‖) conducted an

investigation into overtime compensation paid to

certain employees.

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Wage and Hour


In that case the Department of Labor determined 87 of

Defendant‘s employees were owed back wages under

the FLSA for the period up to and including November

18, 2008. The DOL then determined the amount owed

to each employee and prepared and issued a Receipt

Form to all 87 employees.

Attached to the Receipt Form was a check issued by

Defendant to each employee for the amount owed as

determined by the DOL.

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Wage and Hour


The Receipt Form, U.S. DOL WH58, states:

NOTICE TO EMPLOYEE UNDER THE FAIR LABOR

STANDARDS ACT- Your acceptance of back wages due

under the Fair Labor Standards Act means that you have given

up any right you may to bring suit for back wages under

Section 16(b) of that Act. Section 16(b) provides that an

employee may bring suit on his/her own behalf for unpaid

minimum wages and/or overtime compensation and an equal

amount as liquidated damages, plus attorneys‘ fees and court

costs. The statute of limitations for Fair Labor Standards Act

suits require that a suit for unpaid minimum wages and/or

overtime compensation must be filed within 3 years of the

violation. Do not sign this receipt unless you actually have

received payment of all back wages due.

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Wage and Hour


When an employee endorses and

cashes a check pursuant to a supervised

settlement, the employee has waived

his/her right to sue.

21

Wage and Hour


A non-supervised settlement of FLSA

Claim is not enforceable.

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Strategies to Consider

As an employer, when you‘ve detected

an issue you‘d like to resolve, consider

this strategy:

1. Contact the DOL

2. Ask the District Director to work with

you

3. Upon the DOL‘s agreement to

cooperate:

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1. Identify issues of violation in need of

correction;

2. Identify records that will be used as

the basis of calculations;

3. Identify the method of calculation;

4. Secure DOL‘s approval for the manner

and method of self-audit.

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Produce Spread Sheet Calculations to

DOL – secure WH 58s to terminate all

claims.

25

Douglas Weiner

Senior Trial Counsel

[email protected]

New York Office

Phone: 212/351-4770

Fax: 212/878-8681

DOUGLAS WEINER is a Senior Trial Counsel in the Labor and Employment practice

in the Firm's New York office. He has 30 years of federal wage and hour litigation experience.

Mr. Weiner:

• Provides compliance advice and counsel to employers to avoid litigation

• Defends class actions in federal and state courts and arbitrations

• Defends FLSA collective actions in federal and state courts and arbitrations

• Defends government audits involving 1099 workers, Unemployment Insurance eligibility, prevailing wage

requirements, and other wage and hour investigations

• Negotiates settlements of disputes and lawsuits

As Senior Trial Attorney for the New York Regional Solicitor's Office of the U.S. Department of Labor (DOL), Mr. Weiner

was the lead prosecutor on the Northeast Region's most significant and difficult wage and hour and whistleblower cases,

including those pursuant to Sarbanes-Oxley, OSHA and the Fair Labor Standards Act.

Mr. Weiner's past experience includes:

• Litigating numerous federal wage and hour matters, including complex FLSA actions involving exemption

misclassifications, tip credit and tip pooling issues, "off the clock" work, and government contract requirements

• Conducting many trials as first chair prosecutor of actions brought by the U.S. DOL in the U.S. District Courts for

the Districts of New York, New Jersey and Puerto Rico

• Successfully resolving through settlement negotiations hundreds of cases involving a wide variety of wage and

hour and whistleblowing issues

• Guiding Wage-Hour agency officials in their most challenging investigations

• Guiding OSHA agency officials in their most complex whistleblower investigations

26

Title Goes Here

Presented By:

A. Craig Cleland

B. 404-870-1718 |

[email protected] |

Wage-and-Hour Class and

Collective Action Settlements

mailto:[email protected]

28

Court Approval

Rule 23(e) requirements

Court approval under 216(b)

Courts‘ role and authority in approving Rule

23 and 216(b) settlements

Girsh and Dunk factors

29

Court Approval

Varying approaches in 216(b) cases

Hybrid (wrap-around) cases

CAFA requirements

Confidentiality and public policy

30

Common Approval Problems

Insufficient information provided to court

Absence or dearth of discovery

Expedited settlement

Different treatment of class members &

representatives

31


Incentive payments to named plaintiffs

Problematic cy pres awards

Reverter clauses

Reverse auctions

32


Insufficient settlement amounts and

nonmonetary settlements

Overbroad releases

Filing settlement under seal

Attorneys‘ fees & costs

33


Objectors

CAFA compliance

Ethical issues

Rule 68 offers of judgment

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Tax Issues

Caveat—consult tax counsel

Deductibility

Taxable income Personal physical injuries/sickness

Liquidated damages under ADEA

Punitive & compensatory damages

Attorneys‘ fees

Reporting

35

Tax Issues

Reason for payment

Back pay (front pay)

Certain payments not wages Liquidated damages under FLSA

Punitive damages

Attorneys‘ fees

Reporting

Enforceability of allocation and collusion

36

Cases

Amchem Prods., Inc. v. Windsor (U.S. 1997)

Binker v. Commonwealth of Pa. (3d Cir. 1992)

Butler-Jones v. Sterling Casino Lines (M.D. Fla. 2009)

Clark v. Am. Residential Servs. (Cal. Ct. App. 2009)

Collins v. Sanderson Farms, Inc. (E.D. La. 2008)

Davis v. J.P. Morgan Chase (W.D.N.Y. 2011)

Dees v. Hydradry, Inc. (M.D. Fla. 2010)

Dunk v. Ford Motor Co. (Cal. Ct. App. 1996)

EEOC v. Consol. Edison (S.D.N.Y. 1983)

Girsh v. Jepson (3d Cir. 1975)

Kakani v. Oracle Corp. (N.D. Cal. 2007)

Kullar v. Foot Locker Retail, Inc. (Cal. Ct. App. 2008)

Lynn’s Food Stores v. U.S. (11th Cir. 1982)

Ortiz v. Fibreboard Corp. (U.S. 1999)

Martinez v. Bohls Bearing Equip. Co. (W.D. Tex. 2005)

Moore v. Ackerman Inv. Co. (N.D. Iowa 2009)

Munoz v. BCI Coca-Cola Bottling Co. (Cal. Ct. App. 2010)

Nordstrom Commission Cases (Cal. Ct. App. 2010)

Woodall v. Drake Hotel (7th Cir. 1990)