Settle quickly if you’re worried overtime case will expand — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Settle quickly if you’re worried overtime case will expand

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Overtime collective actions represent a growing nationwide trend. These are cases in which one employee claims his employer misclassified him as exempt and owes overtime. The employee also claims to represent everyone else similarly situated. If such a case goes forward, it may mean the employer must pay out thousands of dollars in unpaid overtime.

Employers have only one chance to make the case go away—by offering to settle the case immediately before anyone else signs on to the lawsuit.

That’s because a special litigation rule allows employers to pay up what the employee claims is owed and get the case dismissed before others are added to the lawsuit. Once a second employee signs on, however, all bets are off.

Recent case: Richard Yeboah worked as a salaried parking lot attendant and manager for the Central Parking Authority of New York. He was reclassified as an hourly employee after about 18 months.

Yeboah sued, and the Central Parking Authority offered to pay him all he was owed—approximately $13,000—under a special court rule that allows defendants to settle cases for what the plaintiff claims is owed. Yeboah refused the offer and asked the court to allow him to represent all other Central Parking Authority employees who might have been misclassified. His attorney already had found another employee interested in signing on with the suit.

The Central Parking Authority asked that the case be dismissed based on its offer. It argued that the offer made the lawsuit moot. But the court disagreed because a second employee already had said he wanted to join in. The court said without the other employee, it would have dismissed the case. (Yeboah v. Central Parking Authority, No. 06-CV-0128, ED NY, 2007)

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