July 23, 2008Client Alert

Don't Get Caught With Your Head In The Wage And Hour Class Action Sand

Wage and hour class actions continue to have a dramatic and costly effect on employers. Employers are increasingly being sued for not counting certain time as "hours worked" for purposes of calculating a nonexempt employee's regular and overtime compensation.

Frequently these actions arise when an employer orders nonexempt employees to stay after their shift to finish certain tasks that were not finished during the workday without counting that additional time as "hours worked," or when employees are forced to work through their meal and rest breaks, regardless of whether or not those breaks are paid.

In Braun v. Wal-Mart, No. 19-CO-01-9790 (1st Dist. 2008), a Minnesota state court recently found that Wal-Mart violated the Minnesota Fair Labor Standards Act over two million times for denying its employees the ability to take rest and meal breaks and for forcing them to work off the clock during mandatory, work-related trainings. The Court awarded over $6.5 million in damages to approximately 56,000 current and former hourly Wal-Mart employees.

Significantly, the Court noted that Plaintiffs did not have to prove that every class member was harmed in order for the class to prevail and rejected the need for an exact number or percentage of violations. General patterns and some shared experiences were sufficient for the Court to certify the class on a state-wide basis. Given the sheer enormity of the class and the corresponding millions of break opportunities, the Court reasoned that class members would have indeed missed some breaks over the course of the class period. Based on "human experience" and "common sense," the Court concluded that the totality of the evidence supported the inference that a significant number of wage and hour violations occurred and found the class-action vehicle to be the only practical way of dealing with this case.

In ruling against Wal-Mart, the Court considered class member testimony, contemporaneous written employee feedback received by Wal-Mart (both solicited and unsolicited), Wal-Mart's time clock records, the findings of Wal-Mart's internal audits, the timing of Wal-Mart's decision to stop having associates clock in and out for rest breaks, and various verbal and written admissions by Wal-Mart's corporate officers and management.

Not only did the Court find that Wal-Mart was on notice of numerous wage and hour violations from many sources, but also it found that Wal-Mart had failed to correct the problem. Wal-Mart utilized an internal audit program but the Court felt that "Wal-Mart management responded to the audits with no action. In essence, they put their heads in the sand."

Lessons to be learned to help avoid wage and hour class actions:

  • As a general rule, if an employee's time is spent for the benefit of the employer, you should count that time as "hours worked" regardless of whether the time the employee spent was authorized.
  • For employers with no overtime policy, be aware that this may cause employees to work through their breaks in order to get their work done.
  • You may require that overtime be approved in advance by an employee's supervisor and may even make unauthorized overtime a disciplinary issue. However, employees must still be compensated for all hours worked regardless of prior approval for those hours.
  • If an employee is required to report for mandatory work-related training or other meetings during times when that employee would not otherwise be working, those hours must also be counted as "hours worked" and paid accordingly.
  • Accurate and consistent record keeping and appropriate and responsive employee policies regarding hours worked for nonexempt employees are essential.
  • Internal audits to ensure compliance with company and statutory policy are advisable. But, be prepared to act upon the information received.
  • Even if the information comes to the attention of management through informal channels, and especially if the results are not expected or favorable, it is vital for management to deal with these issues promptly.
  • Make compliance with corporate and statutory requirements regarding meal breaks, rest breaks and off-the-clock work a factor in supervisor and management evaluations, which should help reduce the number of violations,
  • Counter-balance profit-making incentives for managers (which may lead to wage and hour violations) with compliance-gaining incentives or rewards for follow through on the implementation of compliance policies.

Michael Best's Class Action and Multi-District Litigation Team has the experience, tenacity and resources available to successfully handle local, regional and national cases in state and federal court. We have represented clients in class action and multi-district litigation involving a wide variety of claims and industries, including: employment; financial services; insurance; manufacturing; products liability; real estate; restaurant; retail; and securities.

When faced with a potential class action, clients need exceptional representation both inside and outside the courtroom. We understand that meeting our clients' business expectations is particularly important in these high-stakes cases.

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