When class-action wage lawsuit looms, handle employee ‘opt-out’ phase with care — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

When class-action wage lawsuit looms, handle employee ‘opt-out’ phase with care

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Employees who think they have been misclassified as exempt under the Fair Labor Standards Act (FLSA) and the California Labor Code may sue on behalf of themselves and all similarly situated current and former employees.

Generally, if the case is approved as a class-action lawsuit, those current and former employees will get a chance to opt into the lawsuit for the FLSA claims and opt out of the state case. How employers react to the news of a wage-and-hour lawsuit can affect how the court handles the opt-out process.

For example, if employers threaten or otherwise actively push employees to opt out, the court may actually leave everyone in the case and then let them remove themselves after the case is over. That can be a problem for employers. If the employees win, chances are that no one will want to opt out, because then they wouldn’t get any part of the money the court awards.

Suffice it to say, you want to remain as neutral as possible when opt-out notices arrive.

Recent case: Lynn Wang and two other reporters working for the Chinese Daily News sued, alleging they had been wrongly denied overtime pay and meal breaks because they were classified as exempt creative professional employees.

They filed the lawsuit under both the FLSA and the California Labor Code and sent out notices to all similarly situated present and former reporters.

An astonishing 90% of current employees opted out of the lawsuit. Ordinarily, less than 1% of potential class members opt out in cases like this.

Wang argued that the reason was the newspaper had placed the opt-out forms on a table under a banner that said, “Don’t tear the company apart! Don’t Act Against Each Other!” The paper terminated Wang during the opt-out period.

The court said those actions were coercive and refused to allow anyone to opt out.

Then a jury heard the case and concluded that the reporters, who largely gathered facts and rewrote press releases, were not exempt employees. It said only investigative journalists and reporters at the peak of their careers could be reasonably classified as creative professional employees.

The jury also concluded that the reporters were too busy, worked too many hours and had too little time to ever take meals during their long shifts.

The newspaper appealed, but the 9th Circuit Court of Appeals let the jury decision stand. That’s good news for the paper’s other reporters: They’re now eligible to collect damages. (Wang, et al., v. Chinese Daily News, No. 08-55483, 9th Cir., 2010)

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