Use new weapon to fight class-action wage suits — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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Use new weapon to fight class-action wage suits

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in Human Resources

It's no secret that wage-and-hour class action lawsuits, in which mobs of employees sue for unpaid overtime, have skyrocketed. They can be enormously expensive. But a California appeals court ruling gives your company new ammunition to stop the case from becoming a class action, forcing employees to play one-on-one.

The case: Two employees of Sav-on Drug Stores filed suit claiming to represent as many as 1,400 current and former managers of the company's 300 retail stores. They argued that they were due back-overtime pay because they'd been misclassified as exempt managerial employees.A lower court granted class certification to the 1,400 employees, but a California appeals court said that was a mistake. This marks the first time a state appeals court has weighed in on the validity of the class action format in wage claims.

A class action evaporates if each worker's claim depends on separate, work-related facts that apply only to that person. Sav-on showed that determining whether workers were exempt or nonexempt depended largely on whether they spent more than half the workweek on nonexempt tasks.

Because the duties and time spent on each task varied from manager to manager, based on store size, location, number of staff, etc., the court said individual issues would come into play, having more impact on each manager's specific duties than generic, companywide job descriptions. (Sav-on Drug Stores Inc. v. The Superior Court of Los Angeles County, No. B 1526828, Cal. App. 2, 2002)

Advice: You'll have your best chance at getting class certification denied if you can show variation in how workers perform their jobs and allocate their time between exempt and nonexempt work. This ruling doesn't spell the end of class-action overtime suits, but it will make it harder for employees to sue. Although it's key for California employers, the case is casting a long shadow.

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