Last week, while most of us were focused on the events in Boston, the U.S. Supreme Court came down with a notable decision last week involving a wage & hour class action (it’s actually called a “collective” action, but for the non-lawyers out there, just think of it as a class action) and what should happen when a class representative fails to accept an offer to compromise by the employer that would have made the plaintiff “whole”. 

U.S. Supreme Court

Before you get too excited, its worth noting to the human resources professional out there that it’s hard to see how this case is going to change the day-to-day advice you are giving.  This Supreme Court’s decision is one only a lawyer could love.

But the case is important for employers and lawyers, because it provides another tool to use in defending against wage & hour claims. 

Indeed, combined with the court’s recent decisions limiting class actions (see Comcast Corp v. Behrand case) and enforcing arbitration provisions (see AT&T v. Concepcion line of cases), it demonstrates how the court system is grappling with an increasing number of wage & hour claims that threaten to overwhelm the system.

The Symczyk case has been neatly recapped in the Employment Class Action blog here:

The plaintiff brought FLSA claims challenging the employer’s use of an “auto-deduct” policy for meal periods. Along with its answer, the defendant made a Rule 68 offer to the plaintiff of judgment for $7,500, plus attorney fees and costs to be determined by the court….

When the plaintiff did not respond to the offer, the defendant moved to dismiss the case. The district court dismissed the FLSA claims on the basis of Rule 68 and remanded the remaining state law claims….

 The Supreme Court … found that the district court had correctly dismissed the case. Because the plaintiff did not contest that her own personal claim would have been satisfied by the offer, the majority assumed that it did, indeed, moot her individual claim. .

Ultimately, the Court held that an offer of judgment under Rule 68 that satisfies the representative plaintiff’s claims moots a potential collective action under the FLSA.

But the issues surrounding this case are far from settled. As aptly noted by the Wage & Hour Litigation Blog:

For now, the viability of the specific strategy utilized by Genesis remains in the hands of the circuit courts, who will be left to determine the circumstances under which an offer of judgment can moot a claim.  However, the case is certain to prove to be a key FLSA precedent, the first since the Supreme Court’s 1989 ruling in Hoffmann-LaRoche v. Sperling, as it draws a much clearer line between class and collective actions than has existed in the past. That distinction will affect the way collective actions are litigated–from the “certification” process to discovery and ultimately to trial.

What’s the bottom line for employers?

For employers, the case emphasizes a few things. First, the legal landscape of employment law continues to get specialized.  If there is a potential for a wage & hour class action, it’s important to get employment law counsel involved immediately to help devise a multi-faceted approach on how to handle it.  In this case, the employer responded to the complaint and immediately issued a Rule 68 offer of judgment. 

Second, when defending against wage & hour class actions, don’t overlook procedural tools that can help narrow the issues or, potentially, eliminate the threat of a wage & hour class entirely.  If there is a mandatory arbitration policy, it will likely make sense to invoke it immediately.   

And lastly, if you do have some potential exposure on wage & hour claims, it doesn’t make sense to wait until the claim is filed. Work with counsel to develop an approach that can reduce or ultimately eliminate that liability exposure. That approach may include re-classification of employees or an inclusion of an mandatory arbitration provision.

  • Jay Wolman

    Just a brief note, the Court ruled that if an unaccepted offer moots a plaintiff’s claim, he is precluded from bringing a collective action.  The Court opted not to address the question of whether an unaccepted offer actually moots the claim.  Lower courts are split and the parties did not address the question below.  

  • I am not as certain as some that the case comes out the same way if the issue of mootness is properly contested.  Here is the money quote:

    “While the Courts of Appeals disagree whether an unaccepted offer that fully satisfies a plaintiff ’s claim is sufficient to render the claim moot, we do not reach this question, or resolve the split, because the issue is not  properly before us.”

    I wonder how Justice Kennedy will come out on this issue if he is not given an easy way out.