An Employer’s Legal “Waterloo”: the Class Action

Your company is at the height of its profitability. You’re doing business better than ever before. Your marketing team is meshing well with accounting, and your folks down in IT have run out of items for their wish list. All is well, and you’re at the helm. The grass is green and it couldn’t be greener. Then it comes at you: an onslaught of current and former employees led by aggressive attorneys with boxy briefcases. One of them walks up to you and hands you a federal district court complaint. You’re now the defendant in a class action.

A recent set of litigation reports published by Seyfarth & Shaw, LLP, shocked the employment community with its figures. The Top 10 wage and hour (i.e. Fair Labor Standards Act) class action settlements produced a micro-economy of $463.6 million dollars. The Top 10 employment discrimination class action settlements rivaled the gross domestic product of Micronesia with $295.5 million. This doesn’t even touch on the retirement-plan-related class actions brought under ERISA–another major threat to employers that is gaining momentum.

Standing on that grassy hill, looking over the army of workers who are claiming you didn’t pay them overtime, didn’t keep track of their hours, didn’t pay them minimum wage, forced them unfairly to finance their own uniforms, you ask, “How did it come to this? I’ve never even been audited for a wage and hour violation! And the EEOC barely knows me!”

Your best defense is to protect your flanks with a three-part approach. Audit yourself and regularly review your pay practices for compliance. Next, train your Human Resources staff, supervisors, and managers with respect to employment laws. Finally, keep up with technology and maintain great records, whether it’s for hours worked or performance documentation. The best way to save money here is to avoid litigating the class action altogether. Once your flanks are covered, your business can stand tall and push forward, fighting the battles that really matter.