Benefits and Compensation

Can an Early Settlement Avert Collective Actions? (Maybe)

In Genesis Healthcare Corp. v. Symczyk, the U.S. Supreme Court ruled that, at least in this case, action by the employer to offer a settlement “mooted” the collection action, says Brinkerhoff.

(A case is “moot” when the issue has been resolved, and the case is no longer “live.”)
Brinkerhoff, who is an associate in the law firm Holland & Hart LLP in Las Vegas, made her remarks at the Advanced Employment Issues Symposium, held recently in Las Vegas.

In Genesis, registered nurse Laura Symczyk, a single plaintiff, filed a collective action alleging that the employer’s policy of automatically deducting 30 minutes for meal periods violated the Fair Labor Standards Act because she and other nurses did compensable work during the meal period.

Before the Court could conditionally certify the class and thus before other plaintiffs could opt in to become part of the suit, the employer made a $7,500 “offer of judgment” under “Rule 68.” Although Symczyk declined the offer, the Court ruled that the offer made her claim and the entire collective action moot.

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Will an Offer of Judgment Work for You?

This is a tricky and technical legal situation. Different lower courts have ruled differently, and because of legal technicalities, the Supreme Court decision didn’t fully settle the issue.

Furthermore, many of these cases are now being brought in state courts where the issues are not the same. Under state law, such suits may often be brought as class actions, whereas under the federal FLSA, wage/hour suits are brought as collective actions. (Class actions are opt-out; collective actions are opt-in, that is, class members must agree to be in the class.)

Nevertheless, it may be worth talking to your attorney to see if making a quick offer that would fully satisfy a claim might be a good strategy.

Managing your organization’s response to wage/hour lawsuits—just one more challenge for compensation managers. Wage and hour should be simple, but it’s just not. Complying with the Fair Labor Standards Act (FLSA) is one of the most confusing and challenging things comp pros have to do.

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Why are aggressive attorneys so eager to file claims on behalf of employees? Because there’s so much money to be made! Some examples are:

  • $4.75 million: Hospital in Thousand Oaks, California, settles wage and hour lawsuit over miscalculated overtime pay and failing to compensate workers for missed meal and rest periods.
  • $1.15 million: Las Vegas construction company to pay back wages to 1,060 current and former employees.
  • $976,327: New Mexico aerospace company settles with 900 employees who were routinely required to work through lunch breaks without compensation.
  • $340,400: New Jersey convenience store agrees to pay back wages and damages for violations of overtime and recordkeeping.
  • $84,541: New York physical therapist agrees to pay 22 employees for minimum wage violations.
  • $30,000: Texas chain of four gas stations agrees to pay their six hourly employees, again, for recordkeeping and overtime violations.

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