By MATTHEW BRODSKY, senior editor/Web editor of Risk & Insurance®
Days before Christmas, massive retailer Wal-Mart Stores Inc. announced it would settle 63 wage-and-hour class-action lawsuits for as little as $353 million or as much $640 million. In comparison, the top 10 private wage-and-hour settlements from 2008 totaled $252.7 million, according to the fifth annual Workplace Class Acton Litigation Report from international law firm Seyfarth Shaw LLP, released on Jan. 13.
So the Wal-Mart settlement was big.
"Anything involving the world's largest employer tends to be newsworthy," said Gerald Maatman, general editor of the report and Chicago-based co-chair of the firm's Complex Discrimination Litigation Practice Group. "And there's a trickle-down effect."
Meaning Wal-Mart makes headlines, employees everywhere read them, become more informed about wage-and-hour issues, and wonder if they're losing out on overtime pay or work breaks, putting employers everywhere under a microscope.
"People will wonder about their own personal situation," Maatman explained to Risk & Insurance®.
Risk managers everywhere should wonder if their company's payroll procedures and how employees are classified and paid are up to snuff with state and federal law. That's what Wal-Mart claims to have done, after all, since the suits were filed.
"Our policy is to pay associates for every hour worked and to provide rest and meal breaks. ... We have worked hard to have the right communication, processes and systems in place to help us live up to this commitment," said Tom Mars, executive vice president and general counsel, Wal-Mart Stores, in the company's press release.
In the settled cases, Wal-Mart was accused of, among other things, making workers toil off the clock, not permitting lawful work breaks and tampering with timecards.
63 AMONG MANY
If the Wal-Mart settlement does not get employers' attention, perhaps the fact that it's just one of many would. As Maatman explained, wage-and-hour suits are the "tort of the day." There were more Fair Labor Standards Act class-action rulings, for instance, than class actions based on discrimination or ERISA.
If they wanted to, the plaintiffs' bar could consider a wage-and-hour anytime a worker gets fired, Maatman said. In part, it's because the law here is still evolving.
But it's also because they are relatively easy class actions to put together. Employers pay workers with a common payroll, explained Maatman, so if an attorney can prove a wage-and-hour for one worker, they can form a class with every worker at that employer.
Some talk has been made in the press that Wal-Mart agreed to settle in December out of fear of stepped-up enforcement from the incoming Obama administration. Though Maatman agreed Obama might put more emphasis and resources into enforcement, he said the "government has always been vigilant for workers' rights."
And still, the "lion's share" of these suits end up in private litigation, not cases brought by the government.
OTHER CLASS ACTIONS
While wage-and-hour cases dominated the courts with their numbers and earned ink in the headlines, the winner in 2008 for settlements of sheer magnitude were ERISA-related class actions. We're talking the "rust-belt cases," said Maatman, involving "huge liabilities" and "ginormous" settlements.
There was the $14 billion settlement with Ford Motor Co., the $3.4 billion settlement with Delphi Corp. and the $1 billion settlement with Goodyear Tire & Rubber Co. The top 10 settlements in this class last year totaled $17.7 billion, compared with $1.818 billion in 2007.
Albeit, these suits are "once in a lifetime" events, according to Maatman. These in particular resulted from the economic global collapse in 2008. But according to the Seyfarth Shaw report, "The current wave of ERISA class actions has not yet crested." Employees will continue suing over plummeting values in their 401(k)s, or because of hidden or exorbitant 401(k) fees.
January 16, 2009
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