Upcoming Installments of The Proactive Employer Podcast: 4/23 - 5/17

Upcoming Installments of The Proactive Employer Podcast: 4/23 - 5/17

Friday, April 23: In this installment, we will be discussing FLSA and the fluctuating work week with Richard Tuschmann. Mr. Tuschmann is a labor and employment attorney in the Miami office of Epstein Becker and Green. He is the co-author of the blog "Florida Employment and Immigration Law Blog" and editor of Epstein Becker and Green's "Wage and Hour Defense" blog. He is a frequent lecturer on employment law issues and is a regular contributor to Thompson Publishing's "Employer's Guide to the Fair Labor Standards Act".

Friday, April 30: In this installment, I will be highlighting some of the top issues employers should be following to stay compliant and out of the courtroom. Top issues include recruiting and hiring, social media, Employee Free Choice Act, FMLA, ADA, heathcare reform, FLSA and independent contractor classification.

Friday, May 7: In this installment, we'll be discussing what recruiters need to know about the Uniform Guidelines of the Employment Selection process and their liability for discrimination in selection. Our guest for this installment is Karen Mattonen, an experienced recruiter who operates her own business - Advanced Career Solutions - and is actively involved in many industry organizations and activities. She is the co-host of the podcast "The Recruiters Lounge".

Friday, May 14: In this installment, we'll be discussing social media and what employers need to know with Eric Meyer. Mr. Meyer is an attorney at Dilworth Paxson. He concentrates his practice on litigating and providing counsel to employers throughout the mid-Atlantic region on labor and employment issues affecting the workplace. Mr. Meyer's experience also includes preparing social media policies, and he has been quoted on such policies in Business Insurance and ABCNews.com.

Managing the Risk of Wage and Hour Litigation

Federal and state wage and hour class actions have increased dramatically over the past 10 years. In 2009, the top ten private wage and hour settlements under the FLSA totaled nearly $364 million, an increase of 44% from the previous year.

In their April 2010 Labor and Employment Law newsletter,Vedder Price notes that "[s]mart employers are not sitting idle. Rather, they are proactively auditing wage and hour practices and implementing policies and procedures to prepare for and prevent wage and hour claims (including class actions) before those claims are filed." Vedder Price recommends the following:

(1) Ensure compliance with state and federal law - employers should periodically examine their policies and practices, including but not limited to, appropriate exempt / nonexempt classification, payment of all compensable work time for nonexempt employees, correct overtime calculations,  compliance with meal and rest break requirements, and appropriate employee / independent contractor classification.

(2) audit and update record keeping practices - the successful defense of any class action wage and hour lawsuit is contingent on accurate and detailed record keeping. An audit of an employer's record keeping practices is necessary to ensure that records are being maintained correctly and for the appropriate period of time.

(3) Provide wage and hour training for human resources, supervisors, and employees - supervisors in particular should be trained regularly on employer wage and hour policies. Many wage and hour lawsuits arise after supervisors interpret and apply employer policies in an individualized and inconsistent manner.

(4) Implement an effective "open door" wage and hour complaint reporting system - frequently, the most cost-effective way to resolve wage and hour issues is to address the employee's concerns directly. Employers should consider implementing a complaint reporting system that invites discussion about these issues and provides for a timely and fair resolution of employee concerns.

While focusing on policies is certainly important, the real emphasis should be placed on practices. An employer's policies could be in compliance, but in practice those policies are not being followed. One useful tool in assessing how well your organization is implementing its wage and hour policies is an examination of the underlying data. For example, time sheet and clock in / clock out data can be studied to determine whether employees are receiving - and recording - meal breaks and rest breaks in accordance with policy. This data can also be evaluated to ensure that rates of pay are properly calculated. A statistical audit of clock in / clock out data and payroll data can assess whether employees are being paid correctly for overtime hours. Statistical analyses can help you determine whether your policies are in fact being followed in practice.

The Importance of Statistical Evidence - Randall v Rolls Royce

Earlier this month, Hon. Sarah Evans Barker of the US District Court for the Southern District of Indiana denied certification of a putative gender discrimination class action.

Judge Barker's decision is notable not only due to the novel nature of  the class theory that she rejected, but also due to its thorough analysis of the competing statistical evidence before the court. The decision highlights the significance of powerful expert reports and testimony in class actions... (Morgan Lewis Labor and Employment lawflash)

Judge Barker's decision was heavily influenced by her examination of the competing statistical analyses offered by each party's expert. Her opinion stated that:

"if there is a dispute as to the value or applicability or efficacy of either side's expert statistical analysis, the way in which that dispute is resolved impacts both the underlying systemic discrimination claim and the determination of whether a viable class action exists."

In her opinion, Judge Barker acknowledged that the commonality requirement for class certification presents a "relatively low hurdle". According to the Morgan Lewis lawflash, she concluded that "the requirement was not met here, primarily because 'we do not find Dr. Drogin's [plaintiff's expert's] statistical analysis convincing.'" Judge Barker's decision then goes on to discuss a detailed analysis of the statistical evidence relating to the typicality requirement of Federal Rule 23(a) for class certification.

The discussion of statistical evidence in Randall is likely to be important for future class action claims in litigation. But the impact of Randall goes further - it has important implications for proactive analyses as well. Employers should review documentation of their compensation decisions to ensure that this documentation clearly captures the variables determining compensation. The Randall decision criticized the plaintiff's expert analysis for failure to account for fundamental variables determining compensation, such as pay grade. In the event of litigation, an employer will need not only a clearly articulated compensation policy, but also data points for the variables determining compensation. As part of a risk management plan, employers should plan for what information and data will be needed to defend a claim, and to ensure that this information and data is collected and maintained.

Including Statistical Analysis Into Your Employment Litigation Risk Management Plan

Well over 95% of civil litigation cases settle. Many settle after expensive discovery, all too often on the eve of trial; but many times the parties know or could have readily learned most of the key facts relevant to the dispute without incurring much of this expense. Litigants often can achieve better case resolutions earlier, and dramatically reduce litigation expenses, through disciplined case management and rigorous early case evaluation. Use of a structured approach for evaluating cases - litigation risk assessment - is the key to this process.  - PerkinsCoie

What is an employment litigation risk management program? Perkins Coie has a good summary of what a litigation risk management program includes; this summary can be found here. Typically, a litigation risk assessment contains the following items:

• Introduction and Recommendations;
• Summary of Facts;
• Case Status;
• Legal Analysis;
• Strengths and Weaknesses;
• Budget;
• Possible Results and Probabilities;
• Conclusions and Recommendations.

In short, a litigation risk assessment is intended to provide management with a concise evaluation of the risks and costs associated with litigation. What is the value of an employment litigation risk management program? Benefits include:

• significant reductions in the number of pending cases. Dockets may be reduced by half or more as cases are aggressively evaluated early in the process;
• significant reductions in the overall expense of litigation, including both payouts and attorneys' fees and expenses. Again, reductions of 50% or more are not uncommon;
• reduced discovery expenses. By placing the need for discovery in the full context of the case, litigants can better prioritize or even eliminate some of the most expensive discovery such as depositions;
• improved ability of business units to make informed settle-or-litigate decisions;
• improved ability to settle disputes creatively, such as through an exchange of goods or services;
• improved ability to evaluate the performance of both inside and outside counsel;
• increased ability to identify the causes of litigation and to take countermeasures to avoid similar claims.

One additional component that may be added to a litigation risk assessment, depending on the nature of the matter, is a statistical analysis. For example, in a class action discrimination matter, a statistical analysis can be used to:

• address class certification questions, such as commonality and typicality;
• evaluate the merits of the claim(s);
• provide exposure estimates for damages under the assumption that liability will be found;
• assist in the identification of the underlying causes of the litigation;
• assist in the design of countermeasures and evaluate the effects of the countermeasures.

Incorporating a statistical analysis into your litigation risk assessment can provide a more informative assessment of the matter, enabling business units to make better decisions.

Workplace Class Action Litigation: Pro-Active Planning 'Critically Important'

On January 12, 2010, Seyfarth Shaw announced the availability of their Sixth Annual Workplace Class Action Litigation Report.  Information about this report can be found here:

http://www.seyfarth.com/ClassActionReport/

A press release issued by Seyfarth Shaw highlights the increasing number of class action and collective action matters filed, as well as the financial exposure these matters present to employers:

"Since we began publishing this annual report six years ago, both the number of cases filed and the financial exposure that they pose to companies has increased exponentially," said J. Stephen Poor, Chair and Managing Partner of Seyfarth Shaw.  "As plaintiffs' attorneys bring increasingly sophisticated litigation against employers that combine claims under multiple statutes, the financial exposure is only going to become greater for businesses."

Regarding this year's report, Gerald Maatman, Jr., Co-Chair of the firm's Complex Discrimination Litigation Practice Group states:

"One certain conclusion drawn from this year's report is that employment law class action and collective action litigation is becoming ever more sophisticated and will continue to be a source of significant financial exposure to employers well into the future... [G]iven the enormous financial stakes, pro-active planning and legal compliance programs - to get ahead of class action risks - are critically important for businesses in 2010."

Developing an employment litigation risk assessment and management plan is an important component of your overall business strategy.  Minimax Consulting has more than a decade of experience in the statistical analysis of wage and hour issues and employment decisions, including hiring, promotion, termination, and compensation.  If you are interested in incorporating a formal statistical analysis as part of your compliance and litigation risk management program, please contact me for a consultation.