HR Management & Compliance

Early Settlement May Prevent Collective Actions?

Collective wage/hour suits can turn relatively small and inexpensive problems into very large and very expensive ones, but there may be a technique that makes the collective action moot, says Attorney Deanna Brinkerhoff.

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 (FLSA) 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.

In 2012 and 2013, federal wage and hour lawsuits filed under the FLSA reached a new record high. What can you do? Read this free 12-page best practices report from Kronos, and learn 4 steps to follow. Download Now.

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.

Since 2004, federal FLSA cases have more than doubled. Is your organization handling wage and hour compliance correctly? Find out in this free report: Raising the Stakes on FLSA Compliance from Kronos.

On the whole, wage and hour cases are surging. According to the U.S. Department of Labor, the President’s fiscal year (FY) 2014 budget includes $3.4 million for increased enforcement of the Fair Labor Standards Act and the Family and Medical Leave Act.

We know how complicated wage and hour compliance can be. As cases continue to rise and the Affordable Care Act (ACA) adds complexity, it’s helpful to review the questions you should be asking and finding out how to reduce your risk.

Get caught up with a free best practices report from Kronos: Raising the Stakes on FLSA Compliance.

Download Now