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Wage and Hour Class and gCollective Action SettlementsEvaluating Settlement Options and Negotiating the Damages Award

T d ’ f l f

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

THURSDAY, FEBRUARY 7, 2013

Today’s faculty features:

Rachel M. Bien, Outten and Golden, New York

Gregory V. Mersol, Partner, BakerHostetler, Cleveland

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Wage and Hour Class and Collective Action SettlementsCollective Action Settlements

February 7, 2013

Rachel Bien Gregory V. MersolOutten & Golden, LLP BakerHostetler3 P k A 29th Fl 1900 E t 9th St t S it 32003 Park Avenue, 29th Floor 1900 East 9th Street, Suite 3200New York, NY 10016 Cleveland, OH 44114Tel: 212.245.1000 Tel: 216.861.7935E il b@ tt ld E il l@b k lEmail: rmb@outtengolden.com Email: gmersol@bakerlaw.com

Today’s Topicsy p

• Evaluating when to consider settlementa ua g e o co s de se e e• Assessing risk of exposure and

calculating potential damagescalculating potential damages• Obtaining enforceable settlement

agreementsagreements• Tax considerations

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When to Consider Settlement

• Timingg• Information• Practical considerations• Practical considerations

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Timingg

• When an issue is discoverede a ssue s d sco e ed• When an individual claim is made• When a class/collective action has been• When a class/collective action has been

filed

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Pre-Suit Settlements

29 U.S.C. section 216(c):

The Secretary is authorized to supervise the payment of the unpaid minimum wages or the unpaid overtime

i i l lcompensation owing to any employee or employees under section 206 or section 207 of this title, and the agreement of any employee to accept such payment shall upon payment in full constitute a waiver by suchshall upon payment in full constitute a waiver by such employee of any right he may have under subsection (b) of this section to such unpaid minimum wages or unpaid overtime compensation and an additional equal amountovertime compensation and an additional equal amount as liquidated damages.

F WH 58Form WH-58

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The Bottom Line on Pre-Suit SettlementsSettlements

• You can likely settle state law wage and ou ca e y se e s a e a age a dhour claims

• You may not get a binding settlement ofYou may not get a binding settlement of FLSA claims without DOL approval

• But see Martin v Spring Break ’83• But see Martin v. Spring Break 83 Productions, L.L.C., 688 F.3d 247 (5th Cir. July 24 2012)July 24, 2012)

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Timing: Individual Claimsg

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Timing: Collective Actionsg

• Upon filing of suitUpo g o su• Prior to conditional certification• After conditional certification• After conditional certification• After a motion for decertification

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Assessing Risk and Calculating ExposureExposure

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The Parties Have Decided to Mediate But Discovery Has Only Just Commenced –How do the Parties Estimate Damages?• Engage in an informal exchange of information*:

– Payroll data,– Time records,– Documents reflecting relevant policies or practices,g p p ,– Financial information, if defendant is facing hardship.

*If complete data are too b rdensome or costl to*If complete data are too burdensome or costly to produce, a sampling of data is usually sufficient for settlement purposes.

• A Rule 30(b)(6) deposition may help to understand the data and clarify the policies atunderstand the data and clarify the policies at issue.

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Which Categories of Damages Should I Include?Should I Include?

• Unpaid wages (in an overtime action)U pa d ages ( a o e e ac o )– At time-and-a-half or using fluctuating

workweek method?– Two or three year statute of limitations?– On a class-wide basis?On a class wide basis?

• Liquidated damages• Interest (if available under state law)• Interest (if available under state law)• Attorneys’ fees and costs

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Defense Tangibles and IntangiblesIntangibles

• Importance to business modelpo a ce o bus ess ode• Ability to modify operations to avoid the

issueissue• Discovery burdens

“St h” f th fi ht• “Stomach” for the fight

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Obtaining Enforceable Settlement AgreementsSettlement Agreements

• Key Issuesey ssues

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How Does the Settlement Model Affect Damages?Affect Damages?• What is the scope of the release?

– Classwide?– Opt-in only?– General or limited to the claims brought in the g

litigation? • Will there be a claims process or will all class

members who do not opt out receive a settlementmembers who do not opt out receive a settlement award?

• Who will pay for the cost of administration?Will tt ’ f f th f d ill• Will attorneys’ fees come from the fund or will they be separately negotiated?

• Any other bargained for provisions, i.e., y g p , ,confidentiality?

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Common Issues

• Court ApprovalCou pp o a• Confidentiality• Showing your work (making the case for• Showing your work (making the case for

approval)Cl A ti F i A t (“CAFA”)• Class Action Fairness Act (“CAFA”)

• Handling hybrid state law/FLSA claims

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Common Settlement Issues (cont )(cont.)

• Treatment of named plaintiffsea e o a ed p a s• Agreements by counsel not to sue• Reversions• Reversions• Cy pres issues• Attorney fees

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Common Settlement Issues (cont )(cont.)

• Scope of releaseScope o e ease• Opt-outs (state law)• Objections• Objections• Claim administration• Resolving problem claims, claimants, and

stragglers

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Tax Issues

• Get a tax lawyer involved!Ge a a a ye o ed• Deduction by employer• Income to employee• Income to employee

– WagesLi id t d d– Liquidated damages

– Other payments

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Tax Issues

• Consider addressing in the settlement Co s de add ess g e se e eagreement

• Beware collusion issuesBeware collusion issues

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