I’m pretty sure I’m on record as not being a huge fan of mandatory arbitration (requiring employees to sign a contract agreeing to arbitrate employment disputes rather than suing). If not, then, um… I’m not a huge fan of mandatory arbitration.
Having said that, I know a lot of employers love arb agreements and aren’t going to listen to me rant about them. And bully for them – those employers got a nice little win in the 5th Circuit Court of Appeals this week.
In D.R. Horton v. NLRB, the company required its employees to sign an arbitration agreement which not only required the employees to arbitrate, but waived their right to bring their claims in any sort of collective way (read: no class actions), either in court or through a class arbitration. The NLRB said this clause violated federal labor law by hampering the employee’s ability to act collectively.
The company appealed, and this week the 5th Circuit overruled the NLRB. The court basically said that, by striking down the provision, the NLRB was assuming that the principles of collective action protected by the National Labor Relations Act were more important than the Federal Arbitration Act.
This, according to the court, was giving the FAA short shrift. There’s nothing in the NLRA that should prohibit an employer from requiring employees to raise their claims individually, as long as employees are still able to file unfair labor practice charges with the NLRB.
The 5th Circuit is the fourth or so circuit to disagree with the NLRB on this issue, so we’ll see whether they keep fighting it elsewhere. But for those of you locals who love your arb agreements, I think it’s safe to add a class waiver at this point. Even though the 7th Circuit hasn’t ruled on this yet (I think…), I imagine they’d find a lot to like in the 5th Circuit’s ruling here.
H/T Jon Hyman
Welcome, Brave Souls!
You daring few, who by choice, insanity, or lack of better job prospects, have chosen to enter the most frightening, dangerous, soul-sucking realm known to human memory:
Labor and Employment Law!
Bwahahahaahahaahaha-ha ha… (cough).
Should you truly dare to enter this house of the damned, gird yourself for floors of terror, filled with the most despicable scenes of human (resources) horror ever collected in one place! As you enter the facility, please know, I can protect your bodies from these monsters and ghouls, but I can’t promise your mind will surviiiiiiieevvveee!
Before we enter, our fearless leader, Eric “Michael” Meyer[s] has costumes for all! Just no one touch that brightly-colored pony suit in the corner. For it contains nothing but pain and heartache. And possible termination.
Our first stop on our trail of terror is the Cloak Room, where thousands of spat-upon unpaid interns wait to mishandle your outerwear and bring you bad coffee! As Robin Shea explains, don’t let their non-employee status fool you into a false sense of security! One sexual harassment complaint and they pounce!
Quick! Follow me into the next room, where you’ll be met with… THE FMLA!!! [here's where a cackle will go off. It's going to be rad.] That’s right – a room-sized maze of FMLA questions and problems! How will you ever make it through this twisted bizzarro-world?! Read FMLA and WFMLA Trick or Treat? by Jesse R. Dill, of course!
Phew. Thank God you made it out alive! Come with me now into the study, where all the books have been replaced… with TECHNOLOGY! (Aaaaagh! Right? Scarrry!)
To your left is a scene sure to make your blood boil: employers possessing their employee’s email and cell phones! First, Donna Ballman unveils the seedy world of employers trying to destroy all your personal technology when you separate from the company! She says say no! But do you dare?! (You probably do dare. Read the post.)
But what about those guys reading their worker’s private email accounts?! ”Wait!” you say, “it’s on a company-owned device! Phew. Everything’s fine!” BUT IT’S NOT! (squeals!!) As Michael Haberman will tell you, “Just because you own the device…” YOU’LL HAVE TO FIND OUT WHAT HAPPENS! It’s not un-scary!
Now turn your heads this way, where Jon Hyman has provided something truly terrifying! KANYE WEEEEESSST!!! (oooOOOoooh!) That’s right! And he’s coming right for you with all of your employee’s harmful tweets! Your arsenal of labor and employment rules are no match for the virility of the internet! AAAGH!
Now turn your heads that-a-way, and see an employee smashing the Like button on Facebook! Over and Over! And just when you think it couldn’t possibly affect you, Joseph Leonoro tells you a court has ruled that liking things on Facebook is… PROTECTED FREE SPEECH!
We’ll try to escape the study through the secret passage in the fireplace, but as I reach to open the door… Boom! A giant monster emerges! Is it the Beast with two horns? Spake-ing like a dragon?! No! It’s a biometric scanner ready to mark you with the devil’s code! And, as Robert Fitzpatrick points out, failing to accommodate an employee who refuses to use the machine can bring you a lawsuit from the EEOC! The horror!
The Forgotten Passage
We’ll finally make it into the passage, but what’s that sound? It’s like something followed us in! Slowly you turn…to see…THE EEOC!!! There they are, haunting you from beyond the government shutdown grave! And, as you run away, you’ll hear Lorene Schaefer’s warnings fill the passageway: Beware EEOC’s Conciliation Efforts! 5,000 souls have already been shortchanged!
When we finally escape the agency’s clutches, you will find the second horror of this long-forgotten passageway: The Ghosts of Ex-Employees!!! To your left is a Retiree, Yankees hat on, playing phantom bocce ball and sipping a moldy mai-tai. Why is this aged specter so happy? Because you listened to Dan Schwartz (and the Yankees), and knew the rules about discussing retirement with older workers! Now he haunts you only to complain that a tie is a laaame retiiirement giiiift! (It is. Really.)
Next to him is another pleasant poltergeist, this one young and moving! He gives you a wave and a thumbs up as you stumble through the dark. Why is ghost number two happy? Because he knew what Heather Bussing knows: that sometimes termination is a good thing, if it’s done properly!
But wait – what’s this next ghoul’s problem? You remember her – she resigned! So why does she look so menacing? Because, poor soul, she is still possessed by the bad recommendation you gave her when her new job called! Janette Levey Frisch from the Employerologist warned you! Anti-Retaliation Laws May Protect Ex-Employees TooOOoooooh!
The Fortune Teller’s Room
We emerge from the passage in a room covered in scarves and dolls and creepy sssmelllls! And there, in the middle, sits an ancient fortune teller, waiting to show you the doom to come! She lays down a card, and what does it say?!
“You will be visited by nine aged spirits in dark robes! They hold your fate in their hands!”
“No,” you say, “That’s just Phillip Miles’s breakdown of the upcoming Supreme Court Session. I should really read that.”
“You should!” she yells, laying down another card. “A HA!” [Lightning crash! Also going to be rad.] “Your employees will see problems in your organization! And they won’t know who to trust! And you! You will botch the investigation!” She laughs a terrifying laugh.
“Naw,” you say, “I just read this post by Dawn Lormer all about How to Manage Whistleblower Complaints. I’m totally good, bro.”
“Aaand,” you continue, “it’ll probably be that dude in Michigan that claimed to get fired for reporting an over-billing issue to the government, but only had his own word as evidence. And John Holmquist told me that doesn’t cut it in his blog post Take my word for it…Not in Michigan.”
With that, the old woman screams “Daaanng!” and disappears.
Come with me now, down the creaking stairwell to the basement, where the walls are lined with cages containing the living corpses of employers who failed to heed their lawyers warnings! Listen as they wail their pain and fling their dung!
Here, on the left, is our Canadian friend who failed to properly screen and vet his candidates! Stuart Rudner told him not to, but he chose his own path! Now stuck with his horrible employee, even though she lied on her resume, we call this poor soul THE AUTHOR OF HIS OWN MISFOURTUNE!
Down the hall you hear the constant screams of “Aww Brah!” from our Californian cellmate, who ignored the new protections for domestic workers in the Golden State! If only he’d read New California Employment Law Protects Domestic Workers by Ari Rosenstein! It was right there in the title!! Bwahaha!
As we run out of the cellar, the cool air of the fall evening hits you, and you know you’re safe. Now, armed with the cautionary tales of the poor doomed spirits who came before you, you call your loved ones and announce you’re intentions to live life to the fullest from now on. You’re coming home. Changed. For the better.
Til next time, ghouls and goblins, Happy Halloween.
Ever since Starbucks got slapped with a wage and hour lawsuit a few years back, the food and beverage industry has been on notice: wage and hour lawyers are coming for you.
The proverbial blood in the water here, of course, is tips. In Starbucks’ case, it was sharing the tips jar with store managers. For fancy-pants restaurants like New York’s Dovetail, it’s the extra assignments that wait staff usually have to tackle, like folding napkins and cleaning glasses.
Plaintiff’s lawyers see that time as violating minimum wage laws, because servers are carved out of those laws – they can be paid less than minimum wage as long as their tips push them back over the line. But if you’re forced to spend your time doing things that can’t possibly make you tips – well, you get the idea.
If you haven’t been notified by your local association or attorney, I’m hereby warning you – restaurants of every size and price point should be concerned about their server’s pay. When wage and hour lawyers get a little success using a certain theory or fact pattern, they use it against every possible target they can find.
So how do you stop the coming storm of tips litigation? The New York Times is reporting that some big named restaurants (including Grant Achatz’s local landmarks Alinea and Next) are solving the problem by doing nothing short of changing the American dining experience. That’s right, restaurants are eliminating tips altogether. Instead of an arbitrary amount the diner decides on at the end of the meal, these places are including a mandatory service fee based on the total price of your meal, or simply increasing prices and servers’ salaries to compensate for the difference.
I have mixed feelings about this idea. As a labor lawyer, I love it. There aren’t many other places in the world where tipping is commonplace, and anything that makes paying workers simpler and more straightforward is helpful to businesses in the long run. At the same time, I have fond memories of walking home at 2am with a stack of bills in my pocket from the high-end joint I worked at pre-law school, or handing over fifty bucks to my wife from delivering pizzas when I was a judicial clerk. There is something to the tangible, visceral reaction one has to holding that earned money right there in your hands.
But that’s just sentimentalism. And in this game, not getting sued trumps nostalgia almost always. Almost. So I have to say, I think moving away from tips is probably a great and long-overdue decision by the food and beverage industry. I know it won’t be easy, but nothing worth doing is.
And hey, it can’t be as bad as a class action lawsuit.
That’s just a good world view probably… I’m going to put that on a pillow.
For those of you keeping score, I haven’t written a post on here since April. I wish I could say it was because I was so busy. I suppose I could – it’s true that I’ve been doing more client work than ever – but I know those other L&E bloggers out there are way more taxed than I am with actual, substantive work. And since they still manage to crank out these things, I guess that excuse is out.
No, the truth is that I haven’t written anything since April because I haven’t written anything. Since April. I’ve had some ideas, but never pulled it together enough, never used my time wisely enough, never just decided to write. And then, after so much time started to pass, it became harder and harder to decide to do it. Now it was like I had some explaining to do, and that would complicate the writing process even more. The fact that I hadn’t written anything became the best excuse not to write anything. It got absurd.
I don’t really know where I’m going with this post, honestly. I doubt it will make much sense when I’m done writing it; this one’s probably more for me than it is for you guys. Sorry. It’s probably just a way to get over the wall of procrastination-fueled anxiety. But in a way, I suppose, that admission right there is the point of this.
I feel like I have been spinning my wheels all summer. Work’s picked up, and I have the best clients in the world, but the added work has brought with it this… funk. And the funk is killing my productivity. If I’m honest, my response to a little new stress has been to pull my head inside the shell and let a lot of stuff I should’ve gotten to a while ago go unaccomplished. So I’m taking the opportunity to apologize: to my readers, clients, family and friends that my downshift has affected, I am sorry.
To those of you wondering why this BS self-serving blog post is showing up on a professional website, I’ve got two answers. First, to totally kill the turtle analogy, I’m hoping that sticking my neck out here will help keep me moving. Nothing beats public shaming as an instant motivator, and I have deadlines to meet.
But also, as I was thinking about how to get back into posting, and mulling over whether to just start back up like a 4-month break was normal blogging procedure, or write another sad little “whoops, sorry!” jokey post, it occurred to me that I had a third option: I could just tell the truth.
Cue the alarm bells. We’re taught so many times to mask any sign of uncertainty or failure under blankets of “knowledge” that it’s practically a law school course. That’s what this blog is, of course: my attempt to convince you that I know what I’m talking about.
But we lawyers don’t always feel that way. We have moments of confusion, and there are times that we don’t know what the right thing to do is. Sometimes, we know exactly what needs to get done and we watch TV instead. I am as guilty of this as anyone. But, as I said, the mantra has always been: Don’t. Let. On. Build your brand. Fake it til you make it.
And that’s not working for me anymore. I am 5 years out of law school. I don’t know everything I need to know. And from what I’ve heard from guys that have been doing this for a while, I never will.
Here’s the truth: every lawyer you’ve ever met has a collection of thoughts cycling through his head, ranging from delusions of grandeur to a certainty that any minute they’re going to be outed as a fraud. It comes with the title “counsel”. And it turns out if you let these swings get the best of you, you end up worrying about them instead of doing the stuff that needs to get done, wondering why it’s August and you’ve been paying hosting fees to GoDaddy so you can not write on the internet.
So, you know, again, I don’t really know what I’m saying here, except that I am going to start posting again now. And I promise to be better about keeping up with it than I have. Because I have learned that motivation is a lot easier when you’re already moving at a pretty good clip. Slowing down too hard can kill you.
On Wednesday, May 1, I will be in Aurora giving a talk on how to navigate employee social media use at work. It’s a free seminar put on by Aurora University’s Human Resources Institute. If you are in Aurora-land next week (Sugar Grove! Sandwich! Geneva! I’m looking at you!), come have breakfast and find out whether you can fire your employee for whining about you on facebook.
Here’s the details from the HRI folks:
Social media sites such as Facebook and Twitter have become an integral part of our lives and workplaces – we can now meet, talk, market and hire without ever leaving our desks. But with employee’s 24/7 access to the social web, and government agencies weighing in on employer limitations of workplace social media use, the ground is shifting constantly.
This talk will explain current regulations and best practices for HR professionals and business owners, as well as give them a road-map for what’s coming soon.
As I said, this is a free presentation. For more information or to register, contact Shawn Green at 630-844-5527 / email@example.com.
Hope to see you there!
Or, maybe more importantly, why don’t your employees? What motivates people to put their all into their jobs?
In this TedX talk, Dan Ariely has some pretty amazing answers. Take 20 minutes and change your perspective on how to get your employees to really kill it on the job.
Every once in a while, someone randomly asks me a question that sends me down a rabbit hole of employment law that is nearly impossible to escape from. This happened recently, in a discussion of the corporate entities challenging Obamacare’s contraceptive requirements.
Skirting that political minefield completely, the question was this:
Is it ok for a private employer to call itself a “Christian Business”?
…or a Muslim, Jewish, Buddhist, Confucian, Pastafarian, or any other kind of faith-based business, for that matter?
We know it’s done – an Ichthus innocently dropped on the corner of a billboard is not too hard to find – but is it ok? In other words, by declaring your small business “Christian” are you just teeing up a religious discrimination claim? What if you go beyond just calling yourself a faith-based business? What if you actually use your company as a way of spreading the good news, whatever your version of that news happens to be?
Let’s take this one in two parts: (1) whether you can call yourself a Christian business, and (2) how you can act on that label.
Faith-Based Companies Are A-OK!
As should be clear from recent media dust-ups with Chick Fil-A and Hobby Lobby, there is nothing prohibiting you from publicly associating your company with a religion or other movement. Turns out, as the one that runs the business, your company is appropriately a reflection of you.
In fact, your ability as a business owner to associate your company with your religion isn’t just any old privilege, it’s your right under the First Amendment to the Constitution. That means you cannot be sued by an employee simply because you call your company a “[Insert Religion] Business” or slap a crescent moon or an icthus on your marketing materials.
What you can’t do, of course, is allow your religious affiliation to affect your employment decisions. So what does that mean, exactly?
Remember: Evangelize Out. Not In.
In the Bible, when Jesus is on his way back to heaven after the whole Easter morning situation, he tells the apostles that their job is to “[g]o into all the world and proclaim the gospel to the whole creation.”
It turns out that’s great advice for employers with an evangelical streak, too. Sending your religious message out into the world is your constitutional right. Spreading it internally to your employees is a minefield of discrimination-based terror.
That means that you can add religious paperwork, symbols, and messages to your advertising, shipments, public appearances, charitable contributions, etc. without creating a discriminatory environment for your employees, even if they’re packing those shipments, or writing that ad copy. Those things are going out to the world – to your customers, vendors, and to the public.
But when that message turns inward — when it finds its way into handbooks, applications & interviews, annual reviews, company get-togethers — that’s when you run the risk of turning your faith into discriminatory folly.
Now, granted, there are some appellate cases that say providing religious opportunities for employees, like on-site worship services or prayer groups, isn’t discriminatory if (1) they’re 100% voluntary, and (2) they don’t have any effect on hiring, promotion, pay or other employment decisions.
But let’s be real for a minute. Let’s say you follow all those rules to the best of your ability, but end up having to let go of one of the employees who hasn’t been voluntarily partaking in your religious opportunities. What do you think’s going to happen? That’s right, you’re going to get sued.
And now you have to prove to a judge — and then, if you’re really unlucky, a jury — none of whom were there when your employee was screwing up, that your decision didn’t have anything to do with the fact that he never showed up for worship. And up against the outward signs of religious affiliation, the normal HR paper trail just doesn’t carry as much weight.
The bottom line is this: as a private employer, you are legally obligated to ignore a person’s religious status when making employment decisions. That means, for nearly all of us, we will work in places with multiple denominations, creeds, beliefs and the lack thereof represented. But it doesn’t mean you have to leave your faith at the door as a business owner.
Make sense? Got questions? Feel free to comment below, or drop me an email.
Another day, another EEOC announcement to use as a cautionary tale…
If you’re an employer with a progressive discipline policy, you probably know what a “last chance” agreement is – even if you’ve never used or heard of the phrase itself.
True to its name, a Last Chance Agreement is a formal contract that is signed by the employee and a company representative, detailing specific issues that need to be remedied in specific ways, in order for the employee to keep his or her job. It is a PIP on steroids, presented to an employee as a take-it-or-leave-it opportunity: either sign this deal and get one more chance, or we’ll terminate you today. And, like its less-formal disciplinary sibling, a Last Chance Agreement can be a great way to separate a troubled-employee-with-potential from a total-lost-@#$@-cause. A properly-drafted Last Chance Agreement creates a roadmap for an employee eager to set his career back on track, and leaves little room for the f***up to come back later and say they didn’t understand what was required of them when they get fired.
The key phrase there, of course, is “properly-drafted”. Because — like all HR documents — it’s easy to get carried away when preparing an LCA, or worse: just plain sloppy. And — like anything with the word “Agreement” in the title — when that happens, the results can be catastrophic.
Case in point: Last year, the EEOC won a case against Cognis Corp. for improper use of an LCA without ever having to go to trial; the court granted the employee summary judgment, which is unheard of for a discrimination plaintiff. Last month, the agency announced that BASF (which recently bought Cognis) had agreed to pay $500,000 in damages to settle the case.
Why was Cognis’s use of its LCA so cut-and-dry actionable? Well, the way the company wrote it, by signing the agreement, the employees who were trying to save their jobs also agreed to waive any claim or charge of discrimination based on any adverse employment action that happened to them in the future.
You can’t do that.
Like it or not, every employee, even the one you hate, has the right to file a charge of discrimination against you. You can’t require them to waive that right as a condition of keeping their jobs. Let me say that again, but bigger.
You can’t require an employee to waive their right to accuse you of discrimination just to keep their job. Period.
And I’ll go one farther for you: Last Chance Agreements should not include any promises by the employee beyond their assurance that they will perform the tasks contained in the agreement to the satisfaction of management. Period. No promises about forgoing pay increases, waiving time off, losing weight, whatever. I don’t care. An LCA has one purpose, and that is to give a problem employee an understanding of their job, and an out, if they can step up to the plate. If you try to use it for more than that — punishment or catharsis or (God help you) as a way to push someone out the door — you’re asking for it.
Now, when most people read that bold precaution up there, they’re going to go: “Well, yeah, obviously. That makes total sense. This is just one company’s stupid mistake. No one in their right mind would…” and I’m going to stop you right there. Remember when I said that the worse evil was sloppiness? Right. So, the language Cognis used in its Last Chance Agreement is actually standard, boilerplate, important language for a severance agreement. You never want to pay severance without getting a waiver of claims in return. Standard. Boilerplate. Important. Just the kind of thing that, were I an over-burdened HR generalist needing to get this done, I would probably leave in without even thinking, when I tweaked the severance agreement and used it as my LCA.
I’m not saying this is what Cognis did — I have no way of knowing that — but it happens all. the. time. And the smaller the company, the more likely I am to find Franken-contracts riddled with minefields like this one in random personnel files, or even handed out to every employee that gets hired. So what I am saying is that, if you’re going to have your employee sign something that you’ve put together, even if it’s just cut-and-pasted from other agreements — no, especially if it’s just cut-and-pasted from other agreements — you have to have an experienced employment attorney look it over. Not an HR consultant. Not your boss. An employment attorney. If you need to get it done today, email them with that little exclamation point box checked, call them immediately and tell them so. IT HAS TO BE REVIEWED. Whatever time you spend will be less than years in court. Whatever money will be exponentially less than a $500,000 settlement and defense/negotiation fees.
So, if you like Last Chance Agreements, by all means use them. But use them right. And for the love of God let a L&E lawyer look at them first.
See this picture? This is the South Loop Club, a dive bar about a mile from where my wife and I lived when we were hip and urban. The place has been around for a million years, acting as the cornerstone tenant for a defunct tenement hotel. It’s a hole in the wall, is what I’m saying, with 60 different types of beer and a full menu ’til last call.
It’s not a gastropub. It’s not a famous chef’s side project. It’s not a fast-food franchise or a breastaurant. It isn’t reinventing comfort food– hell, it isn’t reinventing anything. It has bartenders, cooks, servers with aprons. It has sports on TVs. The windows and walls are covered in the free cardboard cutouts of curvy women in ill-fitting referee uniforms that places like this get from beer distributors.
In other words, there is nothing special about the South Loop Club. There are thousands of bars just like it in every city, town and rural route in every state in the country.
And that’s the point.
Because you know who did think the South Loop Club was special? The EEOC. To the tune of a cool $100,000:
The EEOC had alleged that South Loop Club fostered a culture where sexual harassment and retaliation against female employees went unchecked. South Loop Club opted to settle the case shortly after it was filed and before answering the complaint.
That’s from the EEOC’s press release about the settlement. Yeah, they love sending out press releases about companies. But here’s the line that should really get your attention:
“This case is a reminder that federal law protects women working in bars from sexual harassment as much as women working in high-end business environments,” said John Rowe, the EEOC district director in Chicago. “It doesn’t matter whether your collar is blue, pink or white — sexual harassment is illegal, and the EEOC will combat it.”
Mr. Rowe’s statement here is not just about bars. What he’s really saying is that the EEOC doesn’t care if you’re Wal-Mart or Wally’s Stop-and-Shop. There is no such thing as “it’ll never happen to us.” Whether you’re a national chain or a dive bar, all it takes is one employee with a complaint and a free afternoon to tip off the EEOC. The rest is just rolling the dice.
I’m sure the SLC never thought the full force of the Federal Government would be trying to nail them for workplace harassment and retaliation. Kind of like how you’re pretty confident you’re too small to be on their radar, too, right? Might want to start socking that settlement money away.
Or better yet, just call a labor & employment attorney. See, the real kicker in the South Loop Club settlement is the list of non-monetary things the company has to do to comply. Things like:
- Adopting and Distributing an Anti-Harassment Policy
- Providing Training on Workplace Discrimination Protection
- Establishing Record-Keeping Procedures for Employee Complaints & Investigations
Guess what? This is what I do! If the poor SLC had just called me or one of my kind, we’d have told them to do exactly what they are now paying the EEOC for the privilege of doing. And now they have to do it all at once, right away, and report their progress to Judge Korcoras at the Northern District of Illinois. Oh, excuse me, I mean they have to pay their attorney to report it. Which I’m sure they’re thrilled about.
And, if they had talked to an employment lawyer, I guarantee putting all this policy compliance stuff together wouldn’t have cost $100,000 on top of their attorney’s fees. But they didn’t.
Hey, weren’t we just talking about how you were kind of like the SLC? So… I’ll just leave the phone on. Call any time.
I got this tweet this morning, from my old law school compatriot and plaintiff’s employment attorney, Walker Lawrence:
Is this the death of collective and class action wage cases in the 7th Circuit? 1.usa.gov/11PWF4F
— Walker Lawrence (@FLSALawyer) February 5, 2013
After some technical issues, I got to the case in question – Espenscheid v. DirectSat USA, LLC. And, needless to say, it’s not good for the plaintiffs. The 7th Circuit affirmed de-certification (i.e. broke up the class action) because damages couldn’t be calculated for all of them as a whole. But FLSA group action death knell? Meh.
In Espenscheid, three employees sued the company collectively – an FLSA version of a class action – on behalf of themselves and 2,341 of their colleagues. They claimed that DirectSat had failed to pay them appropriately for overtime and had forced them to work through lunch and other breaks. The problem was, the employees weren’t paid hourly. They were paid per job. This isn’t a problem in and of itself – you can still file a wage-and-hour case if you weren’t paid by the hour. But you have to show that what you were paid, when divided by the hours you worked, falls below minimum wage, or that it doesn’t include all the overtime you’re due, or whatever.
And here’s where things fell apart for the plaintiffs. They claimed DirectSat tried to obscure the amount they worked by telling them not to report their time (though some did), among other things. Because of the pay structure, there were no records of how long any of the employees worked on any of the jobs for which they were paid.
So how do you figure out what 2,341 people are owed, when you don’t know how long any of them worked? And how do you divvy up the recovery?
The plaintiffs wanted to present a representative sample of 42 employees as a statistical rubric. Based on these 42 employees, the Plaintiffs wanted the court to extrapolate an amount for the whole group of 2,341 employees. You know, statiscital-like. Funny thing about representative samples, though – they have to actually be representative of the whole. Which, per Judge Posner, these were not:
There is no suggestion that sampling methods used in statistical analysis were employed to create a random sample of class members to be the witnesses, or more precisely random samples, each one composed of victims of a particular type of alleged violation.
The real reason I think this case was so badly destroyed was not because damages are hard to prove; it’s because – in Posner’s view, anyway – the attorney’s didn’t do their job dealing with those difficulties. Right before the quote above, Posner said this:
The plaintiffs proposed to get around the problem of variance by presenting testimony at trial from 42 “representative” members of the class. Class counsel has not explained in his briefs, and was unable to explain to us at the oral argument though pressed repeatedly, how these “representatives” were chosen–whether for example they were volunteers, or perhaps selected by class counsel after extensive interviews and hand picked to magnify the damages sought by the class…
So… that’s not exactly a gold star.
No, this case is not an evisceration of wage and hour class actions. I wish. What it is is a cautionary tale to the attorneys who bring those cases: Make sure you are buttoned the hell up. How will you determine actual damages? How will you differentiate between variations in what members of the class are owed? You have to know these answers before you file that complaint. Because I will definitely be demanding those answers when I respond to your claims.
In this case, the plaintiff’s attorney should’ve looked at the way in which these folks got paid and realized the damages issue was going to be a huge hurdle to jump. Not impossible – as Posner noted – but really, really tough. To show up with 42 people and no explanation for how you found them is not going to cut it.
One last note: Posner does mention that, under these facts, there is no good way to divvy up the recovery fairly. In other words – two guys could have the same jobs for the week, but they could take one guy 20 hours, and the other guy 60 hours. That second guy – the slow one – he’d be entitled to overtime, which means he should get more out of the recovery. But the “representative sample” wouldn’t make those distinctions at all. That’s true, and I’m sure scary for Plaintiff’s attorneys, because it basically craps all over the idea of any statistics ever being sufficient in these types of cases.
But that’s the point – it’s these types of cases. Maybe if every employee had such a different experience, it’s not a great candidate for class action litigation in the first place. There are plenty of workplaces where employees punch time cards, or have policies in place that create uniformity. That just wasn’t the case here.
Well, that’s my two cents. Hopefully I can get a response from Walker. And also you people. Comments are right down there.