Top 10 most expensive wage and hour settlements of 2013

The wage concerns that cost companies the most money in 2013

Ask people why they work, and they’re less likely to cite vocational conviction than they are the old practical standby of money. Americans work longer hours than any other industrialized nation, so it’s perhaps not surprising that the money they make can be a touchy subject, and the grounds for some pretty nasty lawsuits.

This past year the Wage and Hour group of the Department of Labor recovered over $249 million in back wages for more than 269,250 workers. But while that figure and the number of lawsuits have increased since 2012, private settlements are down overall. While private settlements totaled $292 million in 2012, they dropped to $248 million in 2013. That being said, some corporations were still on the hook for some pretty massive amounts.

Following on the heels of last month’s discussion of the top 10 most expensive private discrimination settlements of 2013 here we’ll take a look at the top 10 most expensive private wage and hour settlements of 2013 as rated by Seyferth Shaw LLP’s 2014 Workplace Class Action Litigation Report.

 

1) $73 million – Bank Of America

In December of 2013, Bank of America settled multijurisdictional lawsuits from approximately 185,000 of its former and current call center employees for allegations that it required them work when they were technically off the clock. Plaintiffs alleged that the bank’s management of call centers, including a centralized scheduling policies and chronic understaffing, violated the Fair Labor Standards Act (FLSA) by requiring nonexempt employees to work off the clock to make up for these issues. The settlement ended those allegations against companywide policies, and while the amount splits modestly amongst such a large class, the order agreed that it was the best potential result for those plaintiffs.

2) $29.75 million – Tata Consultancy Services, Ltd.

In 2006, two workers from Mumbai, India filed complaint against Tata Consultancy in California for policies surrounding tax processing and returns. The complaint alleged that the IT outsourcing company required workers who were not U.S. citizens to sign over power of attorney, which allowed a third party to calculate tax refunds for them. Once tax refund checks were received, Tata required workers to mail them back to company headquarters. The company denies that any of these activates were illegal under state or federal law, and in 2013 it settled the case to “eliminate any on-going distraction to its associates and management.”

3) $29 million – Ecolab Inc.

In April of last year, environmental services provider Ecolab settled complaints that alleged it violated the FLSA by denying contracted exterminators overtime pay. In 2011, exterminators filed a complaint in California alleging that the company had forced them to work long hours, but had not paid for their overtime. Ecolab argued that because exterminators used hazardous materials in their work, they were not covered by the FLSA.  Hazardous material exemptions in the FLSA were originally intended to discourage truck drivers carrying harmful chemicals from working extra-long and potentially dangerous shifts, and had been applied to exterminators until recently. Ultimately, a class of 400 former and working exterminators settled with Ecolab, and the company was required to re-classify those employed for pest elimination services as non-exempt.

4) $21 million – Merrill Lynch

Not uncommon when large corporations merge, Bank of America’s 2009 acquisition of Merrill Lynch & Co. created a number of issues for employees. The most expensive turned out to be problems surrounding deferred compensation packages owed to financial advisers that did not continue on with the company when it was absorbed by BoA. Employees filed suit in 2009, alleging that they had not received the deferred compensation they were owed. About $16 million of the settlement went directly to a class of close to 1000 brokers, while the remainder paid for attorneys’ fees.

5) $20.9 million – Rite Aid Corp.

Working to put 15 nationwide lawsuits behind them, in Jan. 2013 Rite Aid agreed to pay out a class of around 6,100 assistant store managers who had been classified as exempt for overtime. The first lawsuit was filed in 2008. At that time, assistant managers from Eckerd Pharmacy (which has recently been acquired by Rite Aid) claimed that the duties of the role should qualify it as a non-exempt position. Rite Aid said that while it had a strong case against these claims, the settlement would allow it to avoid a drawn out and expensive court battle. The figure agreed to was calculated to account for back pay and damages for the assistant managers involved.

6) $19 million – AT&T Corp.

In April of last year, AT&T Corp agreed to pay out $19 million to a class of 1,421 field managers based in California who claimed that they were denied overtime pay. The claim that kicked off a class action suit and the eventual settlement alleged that AT&T violated the FLSA by classifying field agents as exempt from overtime, which stopped them from being compensated for the extraordinary hours they were required to work, or when they worked through their breaks. AT&T maintained that because the employees in question were “managers” and oversaw a group of up to 15 subordinates, they were squarely in the realm of exemption. The class argued that because they were required to work upwards of 70 hours weekly, did not do much onsite managing and did not have authority to hire and fire their teams, they were in fact eligible for overtime.

7) $17.5 million – 24 Hour Fitness USA, Inc.

While not one of the larger total settlements, 24 Hour Fitness USA’s Feb 2013 deal did yield one of the largest individual payout on the list. With a class made up of around 862 plaintiffs, each current and former employee of the fitness chain reportedly received $20,000 or more. The payout settled a class action lawsuit alleging that the company required trainers to not only work off the clock, but also did not pay them for overtime.

The deal came after a November 2012 decision by the National Labor Relations Board, which nullified arbitration agreements 24 Hour Fitness required new hires to sign, which barred them from entering class action lawsuits.

8) $14.3 million – Roto-Rooter Services Co.

In September of 2013, a federal judge approved Roto-Rooter’s efforts to settle with a class of service technicians who claim they were unfairly paid for their time with the company. The complaint, which was initially filed in 2010, alleged that technicians paid on a commission basis were not paid overtime or a minimum wage. The plaintiffs also contended that they had been subject to wage deductions that violated the FLSA. The amount settled to was paid out to current and former commissions paid technicians based on the time they had worked during the time frame in question.

9) $12 million – Merrill Lynch

In addition to the settlement it made to address unpaid differed salaries for financial advisers, in 2013, Merrill also agreed to settle a complaint filed by brokers’ assistants that they had not been properly paid for their overtime efforts. Members of the class argued that they had been paid based on the commission shared by the financial advisers that they worked for, however the class argued that under FLSA standards, this type of work should have been classified under non-exempt status. The deal goes to paying out overtime worked and fees for the class.

10) $12 million – Old Republic Title Co.

In June the Old Republic Title Co. agreed to settle a proposed class action, paying a class of roughly 1,100 employees. The class action alleged that employees of Old Republic Title Co and two of its subsidiaries were denied overtime, did not receive the proper meal and rest breaks, and were required to work off-the-clock during a six-year period.

Managing Editor

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Chris DiMarco

Chris DiMarco, Managing Editor of InsideCounsel magazine, has a background in multimedia production with previous involvement in projects in which he developed and created content for...

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