Fair Labor Standards Act Collective Action
Controlling the Risk of "Me Too" Plaintiffs
The Challenge. The issue was whether Employer had improperly classified Employees as exempt from Fair Labor Standards Act (FLSA) overtime pay requirements. Employer was concerned that any settlement would set the floor for future plaintiffs who had not opted into this case. This understandable concern – common in collective actions – was a real barrier to getting to a number Employees would consider.
Overcoming the Challenge. We addressed Employer’s concern in two key ways. First, in digging under the surface in Employer’s room, it became clear there were some facts that would hurt Employer’s exemption argument if the case moved forward, and Employer had taken corrective steps that would strengthen its position in the future. In this light, I asked them to consider whether a future case would afford them a better chance of prevailing – and therefore maintaining operational flexibility.
The second idea resulted from brainstorming together. Of the total settlement amount, Employer allocated only about 40% to overtime – resulting in a formula it was comfortable living with if cited back as precedent by future plaintiffs. The rest of the settlement amount (other than fees) was allocated to a common fund for distribution to select Employees at their counsel’s discretion, akin to a bonus for named plaintiffs.
The Result. Employees felt satisfied, and Employer was prepared to deal from a position of strength with any future legal actions that could be taken against it in matters related to overtime pay.