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Wage & Hour Class
 Action Update
       By
    Bruno Katz
      © 2008 - Shea Stokes Roberts & Wagner, ALC
•   Bruno W. Katz-Shareholder
•   Named as one of the Top 20 Lawyers
    under 40 in the State of California in 2003
•   Active Member of California Hotel &
    Lodging Association and California
    Restaurant Association
•   Member of Global Alliance of Hospitality
    Attorneys
•   Frequent Lecturer on employment
    practices, liability issues and other risk
    management matters
Minimum Wage
    How Do I Sue Thee?
   Negligence
    Let Me Count The Ways!                        RICO
                              MEAL BREAKS

                  Wage & Hour
Wrongful or Abusive Discharge
                                                   ADA



         © 2008 - Shea Stokes Roberts & Wagner,
         ALC
Recent FLSA Wage-Hour
       Settlements and Verdicts
Farmers Insurance:   $220 million for 2,400 workers
Albertsons:          $37 million for 80,000 workers
Rite Aid:            $25 million for 3,000 workers
Bank of America:     $22 million for 6,000 workers
Coca-Cola:               $20 million for 1,500 workers
Shoney’s:                $18 million for 20,000 workers
UPS:                     $18 million for 6,000 workers
Taco Bell:               $13 million for 3,000 workers




                      © 2008 - Shea Stokes Roberts & Wagner, ALC
Why the Increase in FLSA Litigation?
• Highly lucrative for plaintiff’s bar
• Liquidated damages, punitive damages and huge
  attorney fees
• Technical nature of the statutes – employers don’t
  understand them
• Focus of labor organizations
• Lenient class requirements
• Lenient evidentiary requirements

                   © 2008 - Shea Stokes Roberts & Wagner, ALC
Class Action Procedural Issues




          © 2008 - Shea Stokes Roberts & Wagner, ALC
FRCP Rule 23 vs. FLSA 216(b)
Class Action
FRCP Rule 23 is opt-out
Collective Action
FLSA 216(b) is opt-in
FRCP Rule 23 Requires
• Numerosity

• Commonality

• Typicality

• Adequacy

                © 2008 - Shea Stokes Roberts & Wagner, ALC
FSLA Section 216(b)
       2-step certification process:
• Conditional Certification &
  Notice
   – “similarly situated”


• Decertification
   – Burden on defendant after
     discovery

                  © 2008 - Shea Stokes Roberts & Wagner, ALC
Statutes of Limitations
• Rule 23 tolled for all putative class members
  when complaint filed
• Sec. 216(b) not tolled until individual opt-in
  filed
• 2 year limit period under FLSA, 3 if willful
  violation
• Some states have longer periods e.g. 6 in NY, 4
  in CA if willful

                  © 2008 - Shea Stokes Roberts & Wagner, ALC
State & Local Laws
WARNING: State & local laws may be
different and afford more protection for
employees. National employers need to
adjust their local policies to comply.




              © 2008 - Shea Stokes Roberts & Wagner, ALC
Banquet Service Charge
In Massachusetts (by statute) and New York
 (by case law), no portion of the service
 charge may be distributed outside the non-
 supervisory employees performing the
 service.

No 7(i) Commissioned-Employee Exemption
in California, Hawaii & Nevada.
CALIFORNIA MEAL BREAKS
                 »30 minutes for every 5 hours worked
                 »Must start between the 3rd and 5th hours
                 »Must be uninterrupted



Want Fries With That Lawsuit?

© 2008 Fox Rothschild
Defense
           Strategies



© 2008 - Shea Stokes Roberts & Wagner, ALC
•
           Defense Strategies
    Work week

           by Work week


• Person

              by Person
• Individual claims not appropriate for class or
  collective action
Defense Strategies
What do you do when served with
 a putative class action
 complaint?




           © 2008 - Shea Stokes Roberts & Wagner, ALC
Defense Strategies
• Assess exposure and turn off the spigot of
  potential damages
  – Isolate and eliminate practices considered to be
    suspect
                Damages




                  © 2008 - Shea Stokes Roberts & Wagner, ALC
Defense Strategies
• Secure the workplace
  – Document & information preservation
  – Communication strategy to employees
  – Avoid retaliation claims




               © 2008 - Shea Stokes Roberts & Wagner, ALC
Defense Strategies
• Obtain affidavits of
  current and former
  employees and other
  evidence of compliance




             © 2008 - Shea Stokes Roberts & Wagner, ALC
Defense Strategies

Hire Experts Early
Defense Strategies

• Attack credibility & efficacy of class
  representatives’ claims and evidence
Defense Strategies
   Offsets to plaintiffs’
     claims

      – Wage & Hour
        Enforcement Officers
        will tell you that there
        are PLUSES or MINUSES
Defense Strategies
• Plaintiffs’ lawyer
  conduct

  Champerty & Barratry
Defense Strategies
Determine strategy and tactics early
and then implement




           © 2008 - Shea Stokes Roberts & Wagner, ALC
Prevention
    equals
 AUDIT
     © 2008 - Shea Stokes Roberts & Wagner, ALC
PREVENTION
Routine Internal & External Audits

Audit not just to legal requirements but to plaintiffs’
 allegations and “evidence”

Require employee sign-off and certification
PREVENTION
Employee training & interviews as part of
audits

Don’t keep employees in the dark

Enforce wage & hour practices with
 disciplinary action if necessary
PREVENTION
Create a culture of compliance

Managers and supervisors must be held
accountable for compliance

HR and Finance must drive compliance
together
PREVENTION
Compliance plan, including audits, should be
 synergized with your other practices,
 procedures & policies
Prevent
          Strategiz
          e
      Control
THE END RESULT
CASES TO WATCH 2010
Brinker Restaurant Corp. v. Superior Court;
   Brinkley v. Public Storage, Inc. (California
   Supreme Court )
-ISSUE: Does Requirement For Employers To
   Provide Meal and Rest breaks mean must
   ensure breaks actually taken?
CASES TO WATCH 2010
Sullivan v. Oracle (California Supreme Court)
-ISSUE: Does the California Labor Code apply to
   overtime work performed in California for a
   California-based employer by out-of-state
   employees such that overtime pay is
   required for work in excess of eight hours
   per day or in excess of forty hours per week?
CASES TO WATCH 2010
Whalen et al v. JPMorgan Chase & Co
    (Second Circuit Court of Appeals)
-ISSUE: What is the breadth of the language of
   the 2004 Department of Labor revisions to the
   FLSA administrative exemption?
Questions

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Update on Wage & Hour Class Actions

  • 1. Wage & Hour Class Action Update By Bruno Katz © 2008 - Shea Stokes Roberts & Wagner, ALC
  • 2. Bruno W. Katz-Shareholder • Named as one of the Top 20 Lawyers under 40 in the State of California in 2003 • Active Member of California Hotel & Lodging Association and California Restaurant Association • Member of Global Alliance of Hospitality Attorneys • Frequent Lecturer on employment practices, liability issues and other risk management matters
  • 3. Minimum Wage How Do I Sue Thee? Negligence Let Me Count The Ways! RICO MEAL BREAKS Wage & Hour Wrongful or Abusive Discharge ADA © 2008 - Shea Stokes Roberts & Wagner, ALC
  • 4. Recent FLSA Wage-Hour Settlements and Verdicts Farmers Insurance: $220 million for 2,400 workers Albertsons: $37 million for 80,000 workers Rite Aid: $25 million for 3,000 workers Bank of America: $22 million for 6,000 workers Coca-Cola: $20 million for 1,500 workers Shoney’s: $18 million for 20,000 workers UPS: $18 million for 6,000 workers Taco Bell: $13 million for 3,000 workers © 2008 - Shea Stokes Roberts & Wagner, ALC
  • 5.
  • 6. Why the Increase in FLSA Litigation? • Highly lucrative for plaintiff’s bar • Liquidated damages, punitive damages and huge attorney fees • Technical nature of the statutes – employers don’t understand them • Focus of labor organizations • Lenient class requirements • Lenient evidentiary requirements © 2008 - Shea Stokes Roberts & Wagner, ALC
  • 7. Class Action Procedural Issues © 2008 - Shea Stokes Roberts & Wagner, ALC
  • 8. FRCP Rule 23 vs. FLSA 216(b) Class Action FRCP Rule 23 is opt-out Collective Action FLSA 216(b) is opt-in
  • 9. FRCP Rule 23 Requires • Numerosity • Commonality • Typicality • Adequacy © 2008 - Shea Stokes Roberts & Wagner, ALC
  • 10. FSLA Section 216(b) 2-step certification process: • Conditional Certification & Notice – “similarly situated” • Decertification – Burden on defendant after discovery © 2008 - Shea Stokes Roberts & Wagner, ALC
  • 11. Statutes of Limitations • Rule 23 tolled for all putative class members when complaint filed • Sec. 216(b) not tolled until individual opt-in filed • 2 year limit period under FLSA, 3 if willful violation • Some states have longer periods e.g. 6 in NY, 4 in CA if willful © 2008 - Shea Stokes Roberts & Wagner, ALC
  • 12. State & Local Laws WARNING: State & local laws may be different and afford more protection for employees. National employers need to adjust their local policies to comply. © 2008 - Shea Stokes Roberts & Wagner, ALC
  • 13. Banquet Service Charge In Massachusetts (by statute) and New York (by case law), no portion of the service charge may be distributed outside the non- supervisory employees performing the service. No 7(i) Commissioned-Employee Exemption in California, Hawaii & Nevada.
  • 14. CALIFORNIA MEAL BREAKS »30 minutes for every 5 hours worked »Must start between the 3rd and 5th hours »Must be uninterrupted Want Fries With That Lawsuit? © 2008 Fox Rothschild
  • 15. Defense Strategies © 2008 - Shea Stokes Roberts & Wagner, ALC
  • 16. Defense Strategies Work week by Work week • Person by Person • Individual claims not appropriate for class or collective action
  • 17. Defense Strategies What do you do when served with a putative class action complaint? © 2008 - Shea Stokes Roberts & Wagner, ALC
  • 18. Defense Strategies • Assess exposure and turn off the spigot of potential damages – Isolate and eliminate practices considered to be suspect Damages © 2008 - Shea Stokes Roberts & Wagner, ALC
  • 19. Defense Strategies • Secure the workplace – Document & information preservation – Communication strategy to employees – Avoid retaliation claims © 2008 - Shea Stokes Roberts & Wagner, ALC
  • 20. Defense Strategies • Obtain affidavits of current and former employees and other evidence of compliance © 2008 - Shea Stokes Roberts & Wagner, ALC
  • 22. Defense Strategies • Attack credibility & efficacy of class representatives’ claims and evidence
  • 23. Defense Strategies Offsets to plaintiffs’ claims – Wage & Hour Enforcement Officers will tell you that there are PLUSES or MINUSES
  • 24. Defense Strategies • Plaintiffs’ lawyer conduct Champerty & Barratry
  • 25. Defense Strategies Determine strategy and tactics early and then implement © 2008 - Shea Stokes Roberts & Wagner, ALC
  • 26. Prevention equals AUDIT © 2008 - Shea Stokes Roberts & Wagner, ALC
  • 27. PREVENTION Routine Internal & External Audits Audit not just to legal requirements but to plaintiffs’ allegations and “evidence” Require employee sign-off and certification
  • 28. PREVENTION Employee training & interviews as part of audits Don’t keep employees in the dark Enforce wage & hour practices with disciplinary action if necessary
  • 29. PREVENTION Create a culture of compliance Managers and supervisors must be held accountable for compliance HR and Finance must drive compliance together
  • 30. PREVENTION Compliance plan, including audits, should be synergized with your other practices, procedures & policies
  • 31. Prevent Strategiz e Control
  • 33. CASES TO WATCH 2010 Brinker Restaurant Corp. v. Superior Court; Brinkley v. Public Storage, Inc. (California Supreme Court ) -ISSUE: Does Requirement For Employers To Provide Meal and Rest breaks mean must ensure breaks actually taken?
  • 34. CASES TO WATCH 2010 Sullivan v. Oracle (California Supreme Court) -ISSUE: Does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state employees such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week?
  • 35. CASES TO WATCH 2010 Whalen et al v. JPMorgan Chase & Co (Second Circuit Court of Appeals) -ISSUE: What is the breadth of the language of the 2004 Department of Labor revisions to the FLSA administrative exemption?