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Why Employers Choose to Lose and Pay to Avoid Class Claims for Unpaid Overtime

What is worse than having to pay double the back overtime wages owed to an employee plus their attorneys’ fees and costs? If you are an employer who has deprived a large group of employees of the overtime pay they were owed, it’s much worse to be stuck in a case that may force you to pay a class of 100s or 1,000s of workers up to double the back overtime wages they are owed…plus their attorneys’ fees and costs. So, you pay one or a few claims quickly and in full in hopes that others will not find out and/or do anything to protect and pursue their rights.

How Employers Win by Losing

Most claims for unpaid overtime wages begin with one (or a few) workers filing a lawsuit on behalf of themselves and other similar workers as a class action or a collective action. After getting sued, employers often put up a fight to defend the reason(s) they did not have pay overtime wages, however, in cases where liability is clear and the employer has no legitimate argument as to why they failed to pay overtime as require by the labor laws, their strategy can be to intentionally “lose” the case by offering to have a judgment taken against it and paying the employees who filed the case everything to which they could legally be entitled. By doing this, the company is picking-off the few workers who brought the case in order to avoid having all of the other similar employees learn about the case and have the opportunity to recover their backpay in the same lawsuit. While this strategy can often serve to limit the damage and expense of failure to pay proper overtime violations, it can also pave the way for many follow-on claims by similar employees who eventually learn of the prior claim. Because a judgment has been entered, it is a matter of public record and there is no confidentiality or secrecy imposed on the successful plaintiffs – they can tell everyone about the judgment against the company and how much they got paid. Having already had a judgment entered against it for the exact same pay practices involving the exact same type of worker, it makes it impractical for such an employer to do anything other than continue to pay each and every similar worker that asserts a claim. If enough similar employees learn about and pursue claims, employers end up regretting the gamble and having to deal with whack-a-mole litigation, when they could have efficiently resolved all similar claims in one lawsuit.

Case in Point Example

In a recent overtime lawsuit filed in Florida, a utilization review nurse filed a claim alleging that her employer Blue Cross & Blue Shield violated the federal Fair Labor Standards Act (“FLSA”) by misclassifying her and other utilization review nurses as exempt from the overtime laws and not paying additional compensation for their overtime hours worked. Overtime claims for healthcare workers have recently been on the increase. Very soon after she filed her case, her employer(s) offered to have the court enter a judgment against them and agreed to pay her $25,000.00, plus all reasonable attorneys’ fees and costs. By providing her with full payment of any and all amounts she might be legally entitled to as a result of being misclassified for the purposed of overtime pay, the employer was able to put an end to her individual claim, but not the claims of all the other utilization review nurses it has employed and shorted on overtime pay…should they decide to pursue such claims. The employer is betting they won’t.

What to Do If You Have Not Been Paid Properly

When an employer illegally fails to pay workers all of the wages they are owed, it is called wage theft. If you have been working in a job that has been misclassified as exempt from the overtime pay laws and requires you to work more than 40 hours per week for no added compensation, there is a good chance that you and your coworkers could be owed significant compensation for back wages. If you have any doubts as to whether your job duties and/or your pay method satisfy the legal requirements for exemption from overtime pay and other labor law rights, contact the experts at The Lore Law Firm for a free and confidential review. Because of the strict time limits imposed by the labor laws, procrastination can be costly. Call 1-866-559-0400 or submit your information using our convenient Case Evaluation form for a FREE and CONFIDENTIAL review of your circumstances – because time is money.