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Learning to Avoid Costly Wage and Hour Class Action Litigation

I t’s generally understood that litigation, and in particular class action litigation, is a wildly costly and time-consuming process. In fact, wage/hour class action lawsuits represent more than 90 percent of all class actions in the United States, and average nearly US$1.9 million per settlement. The 2017 ACC Mid-Year Meeting session entitled “Avoiding Costly Wage and Hour Class Action Litigation,” discussed the effect of this trend on in-house counsel, and outlined key strategies to avoid breaking the budget in the courtroom.

Here are some key takeaways:unspecified-4
  • In-house counsel must establish clear goals and expectations when conducting an audit. It’s not enough to simply conduct an audit for the sake of discovering inconsistencies. Senior management has to be well informed to take action, make lasting change, and ensure compliance.
  • Arbitration agreements can be a less costly and less risky method to deter plaintiffs and avoid negative publicity.
  • To avoid wage/hour class action lawsuits, it’s essential to adopt legally compliant policies, learn from prior litigation cases, enforce contracts, and conduct thorough M&A due diligence.
During the session, speakers Chris Boman, partner, Fisher & Phillips LLP; Kevin Chapman, associate general counsel, Dow Jones; James Herman, senior managing counsel, North America Employment Affairs, Chubb NA; and Nathalie Le Ngoc, assistant general counsel, employment and ethics,; emphasized that despite often having little merit, most wage/hour class actions have the potential to create significant financial burdens on employers.

In an interactive portion of the session, panelists engaged attendees by asking those with specific internal compliance policies to raise their hands. The panelists then illustrated the importance of setting tangible objectives and showcased the “interdepartmental” approach necessary to address wage/hour disputes. By discussing lessons learned from past litigation, in-house counsel can work collaboratively to ensure policies and practices are adapted to help defend against future actions.

And with class action legislation heading to the US Supreme Court, the need to implement company protections has never been more topical. In the coming months, the Supreme Court will hear Ernst & Young LLP v. Morris, which will help decide whether collective-bargaining provisions of the National Labor Relations Act can prohibit the enforcement of agreement requiring an employee to arbitrate claims against an employer on an individual, rather than a collective basis.

The ruling, if agreed upon, would have a substantial impact on the accessibility of class-action lawsuits against employers. While the road ahead may be increasingly uncertain, ACC is confident that events like the Mid-Year Meeting can provide key insights to help in-house counsel pave a clear path to success.  

The information in any resource collected in this virtual library should not be construed as legal advice or legal opinion on specific facts and should not be considered representative of the views of its authors, its sponsors, and/or ACC. These resources are not intended as a definitive statement on the subject addressed. Rather, they are intended to serve as a tool providing practical advice and references for the busy in-house practitioner and other readers.