Case Example: The role of experts in wage and hour class action suits
What are the potential consequences of failing to have expert analyses performed in a wage and hour suit?
Charles Fields of Edgeworth Economics draws our attention to the decision in Daniels v. Aeropostale West, Inc., which a judge called one of the worst proposed settlements he had ever seen. Fields says this case points to how important a role economic and statistical experts play in wage and hour cases.
Forbes wrote an articles about this suit aptly named “Five Ways to Undo Your Own Class-Action Settlement.”
In this case, the plaintiffs alleged that their employer failed to include nondiscretionary bonuses in its calculation of overtime pay for nonexempt employees. Conditional certification was granted to a class of 594 individuals in 2013, and in the following year the two sides reached a preliminary settlement agreement.
The proposed settlement was $8,645.61 for the class of almost 600. Sixty percent of the class members would have received no compensation, and 30 percent would have received less than $25. Neither party filed an expert analysis of the damages before reaching the settlement.
The lawyers did not collect specific data about overtime hours, the employees who worked during the relevant time period, or the nondiscretionary bonuses paid. (Economic expert Dwight Steward explains here how unmeasured work in wage and hour cases can be measured.)
The judge rejected the settlement amount stating that it was “barren of evidentiary or expert support showing how this proposed settlement could possibly be fair.” The judge then decertified the class.
FLSA cases usually have class certification considered in two stages. While the first step is fairly lenient, the second stage involves a more complex analysis of if the proposed group is similarly situated. In this case, a statistical and economic expert could have determined the bonuses awarded to each class member and if these bonuses were included in overtime calculations. An expert would have found that 60 percent of the collective action members would not be eligible for compensation.
