The New Rules of Negotiating Wage/Hour Class Action Settlements – An Introduction

Back in the "good old days," which weren't always so good for everyone, and weren't that long ago (or old), for that matter, wage/hour class action settlements came easily, with big potential windfalls for the named plaintiffs and their lawyers. Courts are getting tired of these types of settlements - and, in my view, rightfully so, to a large degree.

Class action wage/hour lawyers need to keep in mind why most of us came to this area of the law - to make an impact on wage theft practices impacting large segments of the workforce, by hitting employers the only way we can make it count - at the bottom line. Letting employers off the hook relatively cheaply - with broad waivers for which absent class members get little or nothing in return - is wrong, whether the plaintiffs' lawyers and their named plaintiffs reap a hefty reward or not.

On the other hand - equally importantly - defendants have woken up from the shock of being repeatedly stung in these cases and have started to develop too-clever new means of killing claims for segments of the class, including getting cheap waivers of claims from individuals in the putative class in an efffort to whittle down the numbers of eligible class members. When defendants collect waivers of claims, without fully disclosing the extent of their potential liabilty to these putative class members, and pay pennies on the dollar compare to what they ought to be paying, these employers violate the robust public policies protecting workers' rights to be compensated fairly, and favoring class actions to vindicate wronged employees' wage/hour rights. Clear U.S. Supreme Court precedent and California Labor Code regulations state that employees' rights to be paid their wages are unwaivable. These employers may also violate their ethical obligations (e.g., Cal. Rules of Professional Conduct 3-600), since their interests are or may become clearly adverse to the putative class members' whose waivers they are soliciting, and since they are trying to pressure these under-informed employees to take substantially less than what they are (or arguably may be) owed.

In a series of blog entries over the coming months, I will discuss the string of recent cases in which courts have reacted to plaintiffs and defendants testing the limits of wage/hour settlements, and I will offer some thoughts as to where the courts and parties will be (or should be) drawing the lines in the months and years to come.