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Exceedingly Rare Beast

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Last week the California Supreme Court reversed a $15 million verdict for 260 plaintiffs ($57,000 per person) in a wage and hour class action for unpaid overtime. The class action lawsuit alleged employees were misclassified as outside salespersons exempt from overtime. In the first line of its opinion the court astutely points out that:

“….we encounter here the exceedingly rare beast: a wage and hour class action that proceeded through trial to verdict.”

The trial court, in certifying a class of 260 plaintiffs, devised a plan to calculate liability against the Employer from a random sample and would only hear testimony concerning the work habits of the 21 random sample plaintiffs.

While in at least one other class action the court permitted the use of representative or sample testimony to determine damages (the amount of money the Employer should pay), no such case ever approved the use of sampling to determine liability (whether or not the Employer was actually guilty or not of misclassification).

This case stands for several certainties already known to experienced class action litigators:

  1. There is no quick and speedy fix to a wage and hour class action;
  2. Class certification is critical - employers and their counsel must gather evidence to determine whether or not individualized inquiries predominate early on;
  3. A sensible statistical model is a must –quick and speedy statistical data or a random sampling are flawed and a proper analysis of a wage and hour class action requires the laboriously detailed reconstruction of plaintiff representatives’ wage claims and a large enough representative group of employees across an entire class period.

This case clearly illustrates the long drawn out nature of wage and hour class actions and the uncertainties surrounding certifications. This matter, initially filed on December 26, 2001, after more than 13 years of litigation still has no determination. The high court, while burdening Plaintiffs with the task of creating trial plan that ensures the case is manageable, is sending the case back to the trial court to allow Plaintiffs another bite at the apple seeking class certification. The defense bar will be tuned in to this certification motion and if the Plaintiffs are defeated it could trigger a demise of class action litigation.

Counsel to Management: If you believe your business may have made some payroll mistakes ignoring them is not the answer. For more information about wage and hour compliance please contact The Saqui Law Group.