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OVERTIME CLASS ACTIONS

OVERTIME CLASS ACTIONS. What is Happening and Why Elizabeth Zepeda Smart & Final Stores Corp. Angel Gomez, III Epstein, Becker & Green. An Avalanche of Claims and Large Settlements. An Unprecedented Number of Lawsuits and Claims Filed Very High Reported Settlements and Verdicts.

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OVERTIME CLASS ACTIONS

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  1. OVERTIME CLASS ACTIONS What is Happening and Why Elizabeth Zepeda Smart & Final Stores Corp. Angel Gomez, III Epstein, Becker & Green

  2. An Avalanche of Claims and Large Settlements • An Unprecedented Number of Lawsuits and Claims Filed • Very High Reported Settlements and Verdicts

  3. Farmers Insurance ($90 million for claims adjusters) Pacific Bell ($28 million for sales support managers) Rite-Aid Corp. ($25 million for store managers) Bank of America ($22 million for personal bankers) Blockbuster ($12 million for store managers) Mervyn’s ($11 million) Taco Bell ($9 million for managers and assistant managers) U-Haul ($7.5 million for managers) First Union Bank/Money Store ($6 million for loan officers, assistant managers and commercial loan representatives) Rent-A-Center ($3 million for assistant managers) Wendy’s ($2 million for assistant managers) Reported Settlements and Verdicts

  4. Why is this Happening? • California Law is Unique and Confusing • Most Employers Operated in Good Faith and Classified Employees as “Exempt”- that is, not Eligible for Overtime Pay • Under Federal Standards, Most of These Employees Would be “Exempt” • Under California Standards, the Rules are Very Different

  5. What is the California Standard? • Every employee is presumed to be “Non-Exempt”- that is, must be paid overtime • Unless • The employee falls into an “exemption:” • Executive • Administrative • Professional

  6. “If they have a Manager title, they’re exempt, right?” California Rule is a Strict Duties-Based Test In addition to normal elements (must actually supervise two or more employees, etc.), the tough part of the test for most employers is that the employee must spend more than 50% of time in actual “managerial duties”

  7. Lots of Detailed Issues Arise • Mixture of Exempt and Non-Exempt Duties • How to Compute Alleged Back Pay Due • Waiting Time Penalties • Attorney’s Fees, Interest, and Costs • Statutes of Limitations • Class Certification

  8. Settlement Issues • Whether, When, How, and What,and other Unanswerable Questions

  9. Whether ... • Obviously depends … • Strength of Case on Merits • Strength of Arguments on Class Cert. Issue • Reasonableness of Other Side’s Demands • Operational Concerns • Financial Status of Employer • Status of Discovery/Internal Investigation

  10. When ... • Do It Early? • Saves attorney’s fees and costs • May “signal weakness” • Around Time of Class Cert. Question? • Just before/Just after? • Hang Tough Until Just Before Trial? • Riskier, but may get a better deal

  11. How ... • Mediated Settlement Discussions • Can Be Very Useful to Handle Logistics • Split of Mediator’s Fee • Mediator May be Able to Bring Fresh Ideas • Non-Mediated Discussions • Don’t Have Another Schedule to Work Around • Save the Mediator’s Fee • Mediator May Take Non-Helpful View

  12. What ... • This is the Tough Part - What Should the Settlement Be (If Any …) • Typical Place to Start: Work Weeks x Number of Employees x Average Claimed Differential x “Risk Factors” for Both Sides • “Risk Factors” include Risk of No Class Cert., Risk of Success/Loss on the Merits • Can Include “Creative” Elements Other Than Cash - Vacation Time, Coupons, etc.

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