Recent Wage & Hour Case Underscores the Power of Policies and Training

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Buried behind the stories of the budget battle in Washington and the plummeting stock market, there was some good news for employers on the wage and hour litigation front in July.

Most of you read the recent US Supreme Court’s decision in Dukes v. Wal-Mart.  Dukes held that a nationwide discrimination class action could not be pursued against Wal-Mart, because there was no common policy or practice that could support a class-wide claim. The Court saw the claims as an amalgam of individual and perhaps smaller group claims, not appropriate for a nationwide discrimination class action.

So, where’s the wage and hour tie in?  It came two weeks ago from a US District Court in South Carolina in MacGregor v Farmers Insurance Exchange.   In that case, the court denied conditional certification of an attempted nationwide wage and hour class action against Farmers Insurance.  In making this ruling, the court relied heavily on the rationale of Dukes v. Wal-Mart.  Here’s why:  In MacGregor, the company had a policy requiring employees to record all their time worked. The plaintiffs in that case said that there was also a practice requiring employees to get supervisory approval to work overtime. In some instances, that approval did not occur and the employees allegedly worked overtime without being able to report that time.  Leaning on the Dukes decision, the court in MacGregor found that there was no uniform systemic policy that was being violated to support a class action.  At best, the court said, there were occasional improper enforcement decisions by individual supervisors that, in fact, were contrary to the Company’s policy requiring all work time to be recorded.

Defeating potential class certification in a wage & hour case is certainly good news for Farmers, but what can all employers learn from this ruling?

  1. Having solid wage and hour policies that are well communicated to employees is essential. As seen in MacGregor , these policies proved critical to showing that there was no unlawful common policy or practice that could help form the basis of a class action lawsuit.
  2. It is essential that employers train both managers and employees on their wage & hour policies, bringing them to life.  Effective training translates into fewer folks making missteps and engaging in misconduct.  This avoids compliance problems in the first place.  And if problems do arise, the employer will be in an incredibly strong position to argue, just like in MacGregor, that there was no systemic problem but, instead, a few improper enforcement decisions from some mistaken managers.

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