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Reasons For Early Resolution of FLSA Overtime Claims

By Robin Fawsett (rfawsett@uww-adr.com)

 

Robin Fawsett, September17, 2022

During my practice I was critical of defense lawyers for unnecessarily prolonging civil actions by spending time and money doing often unnecessary motion practice and discovery and waiting too long to gain a full understanding of the case and realizing that it needed to be tried or settled. In U. S. District Courts, where Fair Labor Standards Act (FLSA) actions are filed, courts typically establish a trial date and a mediation deadline soon after filing. The attorneys thus know from the beginning the future time when they are going to have to get serious about understanding and evaluating the case.

It is a lay misconception that one never knows how a case will turn out until someone decides it. In employment disputes, whether discrimination cases or statutory wage claims, the probable or certain outcome can, by diligence and focus, usually be determined within weeks after filing. Once that is known, it is time to think about settlement or litigating.

FLSA claims for overtime compensation, whether based on a demand letter or a complaint, are easy cases to evaluate from their inception. The FLSA overtime provisions require employers to pay nonexempt employees one and one-half times their regular hourly rate of pay for all hours worked over forty in a seven-day workweek. Employers are required to maintain records of straight-time and overtime hours worked. When there are compliant records, whether someone has worked overtime within the relevant period (usually three years) cannot be legitimately disputed. Where there are not, courts accept the plaintiff’s estimate of overtime hours worked. Either way, the issue is whether the employee who worked overtime is exempt. The employer bears the burden of proving any exemption. Whether an exemption applies requires a simple analysis of the employee’s duties. Taken seriously by the employer and a knowledgeable attorney, that takes a day or two.

There are in reality not that many close exemption questions worth litigating. Litigating an exemption issue is usually a jury question, takes a year or two, and costs a lot. Add the fact that most individual overtime claims amount to a few hundred up to two or three thousand dollars, and one begins to see why FLSA overtime actions and pre-suit claims are in most cases ripe for serious and early consideration for settlement. By “most”, I mean well over half.

Costs of defense of overtime claims add up very quickly. Most courts hate FLSA cases, and make the parties’ lawyers do much expensive paperwork and production of records at the very beginning. If the case goes to verdict, the FLSA provides that if a court awards any amount of unpaid overtime, it is required to double that amount as liquidated damages. The kicker is that if any amount is awarded, the court has no choice but to award a reasonable fee for the attorney for the plaintiff(s), to be added to the award and paid by the employer. Overtime cases and pre-suit claims often involve multiple claimants. In such cases, the longer a case goes on, the greater the risk of additional claimants opting in.

There are uncountable numbers of cases in which the fees exceed the aggregate recovery. The optics of that are not good for counsel for employers. That said, there is as much incentive for claimants’ lawyers to settle as there is for employers. Trying these cases is a ton of not very exciting work. The claimants often need the money and value a quick settlement.

My experience qualifies me to mediate these cases, pre-suit and otherwise. I can and will be evaluative if that is called for (it often is) and if a party wants me to offer my evaluation. All federal cases involve mandatory mediation, which too often comes right before trial. Importantly, nearly all overtime actions settle, most, in my view, way too late. Thus, although I am now a neutral, I am an advocate of early mediation and resolution of FLSA overtime claims.


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