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Good policies and records can reduce your exposure to a class action

Posted by Sunny D. Dobashi | Dec 19, 2013 | 0 Comments

By Rafael A. Icaza –

In a recent blog (Rounding Up or Down Your Employees' Hours Can Get You Sued) I wrote that Tesla Motors Inc. was being sued by two workers for allegedly violating California's Wage-and-Hour laws.  The employees claimed that Tesla's practice of rounding up hourly workers' start times and rounding down their end times shortchanged their wages.  They sought class action certification.

A “Class Action” is a proceeding where similarly-situated plaintiffs sue as a group.  In Wage-and-Hour cases the damages to an individual party can be very small.  While a party's case may have merit, an attorney won't take it because small damages often mean small attorney's fees.  But a class action is a different story.  When the small damages of many people are added up, they can amount to a fortune—well worth a lawyer's investment of time and resources.  But, in order for a class action to proceed, a court must make a finding (“certify”) that there are potentially many people damaged in the same basic way who would otherwise be unable to pursue their claims.  A recent U.S. District Court ruling gives us an example of the denial of a class action certification application.

In their lawsuit against CVS Caremark Corp., the plaintiffs sought class certification for three classes of about 51,000 current and former CVS workers.  Plaintiffs' counsel alleged that CVS failed to pay employees and reimburse them their mileage for after-hours deliveries.  U.S. Magistrate Judge Elizabeth Laporte of the Northern District of California denied certification.  She found that the plaintiffs failed to show a uniform policy or practice requiring nonexempt workers to make off-the-clock merchandise transfers between stores without pay.  She also found that “[E]ven if an [in-store-transfer] is performed off the clock, defendants' official policy is that employees must be paid for all time worked . . .  And there is evidence that this policy of paying for all time worked was followed at least as to some ISTs performed off the clock when the manager knew.”

As was the case with CVS, employers can reduce their exposure to class actions by adopting and enforcing policies that comply with Wage-and-Hour laws.  Employers should also keep good records that demonstrate their adoption and enforcement of such policies.  If you would like more information about how to comply with Wage-and-Hour laws, or have other questions about employment and labor law, please feel free to contact me for a free initial consultation.

About the Author

Sunny D. Dobashi

SUNNY D. DOBASHI has spent more than 30 years advising closely held businesses, primarily corporations. His practice includes all facets of legal counsel to the closely held business, including entity selection and formation; operational and transactional planning, implementation, and documentati...

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