Misclassification case could end statistical evidence in class actions

Court says procedure is "fatally flawed" and inhibits due process

While working as a business banking officer for U.S. Bank National Association, Chad Penza made $5 million to $10 million in sales every quarter, making him one of the most successful salespeople in the company. But it wasn’t easy to get there. On weekdays, Penza regularly arrived at the office by 6 a.m. and didn’t leave until 6:30 or 7 p.m. He also worked most Saturdays and Sundays, calling prospects from 7 a.m. until noon. Penza routinely clocked more than 60 hours of work a week.

In late 2001, Penza was identified as a member of a class of 260 business banking officers (BBOs) whom U.S. Bank classified as outside sales personnel exempt from overtime laws. In Duran v. U.S. Bank, the plaintiffs allege that Penza and other BBOs should have been classified as nonexempt employees who were entitled to earn overtime pay.

Margin of Error

Misclassification class actions are a veritable cottage industry in California. In the past year, plaintiffs have obtained multimillion-dollar settlements or judgments against some companies for allegedly misclassifying workers as exempt (see “Misclassification Judgments”).

Certification Stage

The appellate court flatly rejected the idea that such evidence was sufficiently reliable and chided the court for failing to allow U.S. Bank to present defenses to individual claims in a case where there was wide variation among class members.

Adele Nicholas

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