You have new ammunition against ‘Collective action’ overtime lawsuits

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in Human Resources

When slapped with a pay-related lawsuit, the last thing you want is for other employees and ex-employees to piggyback on that suit, creating a big "collective action" case. Good news: A new court ruling highlights a successful defense against such suits: If you can show that the job duties of employees in similar positions are different enough (not identical), courts are more likely to deny the lawsuit's collective-action status.

If other courts pick up on this reasoning, employees will have a harder time banding together to create collective action cases.

Recent case: A field rep sued his employer for unpaid overtime pay. He also sought a collective action by alleging that a group of field reps also were wrongly classified as exempt employees under the administrative exemption to the Fair Labor Standards Act.

A district court rejected the rep's attempt to expand the case on behalf of other field reps. Determining whether each employee meets the administrative exemption requires an "extremely individual and fact-intensive" analysis, the court said. The court concluded that class certification was not "sensible" because it would require a close look at each employee's job duties. In the absence of a common thread linking each member of the group, the court said a class action was inappropriate. (Mike v. Safeco Ins. Co., No. 3:02 CV 2239, DC CT 2003)

Bottom line: This case gives you a way to prevent a lawsuit from becoming a much bigger headache. But your best bet is to avoid the initial lawsuit. Make sure all your employees are classified correctly as either exempt or nonexempt, then pay nonexempt staff the correct overtime amount.

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