Top 3 Keys to Settling Your Wage and Hour Class/Collective Action at Mediation
By Steve Dunn
Wage cases are stressful for everyone involved. Workers, sometimes representing a large, similarly situated group, feel as though they were systematically underpaid. Employers often feel as though they tried to comply with the law, but nevertheless are facing a huge liability. The lawyers on both sides have to contend with difficult substantive law, a tricky procedural minefield, and document-intensive discovery.
By the time mediation day rolls around, everyone wants to settle the case, provided the terms are reasonable. Sorting out the deal terms at mediation is hard enough. The last thing anyone needs is a distraction caused by a lack of preparation or a preventable mistake. While no mediation is ever perfect, here are three keys to setting wage class/collective cases at mediation.
#1: Choose the Right Moment for Mediation
More than other types of cases, timing matters when mediating class and collective actions. Too early, and the parties may not have the information they need to properly evaluate the case. Too late, and they may be staked out on rigid legal positions, having invested significant time and money on the litigation that could have been applied to a settlement.
In most cases, the “Goldilocks” moment is after a reasonable amount of discovery, but prior to class certification or summary judgment. It is essential the parties know enough through discovery to take informed positions about the size and scope of the class, the challenged pay practices, and the plaintiffs’ claimed damages. The ideal moment to mediate is when the parties have enough information to analyze the issues, but while the full range of outcomes in litigation remain on the table.
#2: Do the Math
Wage and hour class/collective litigation involves a lot of math. There is no way around it. You cannot come into mediation expecting simply to react to the other side’s proposals and “see what they are willing to do.”
Assuming you are mediating after a reasonable amount of discovery has been exchanged, both sides should come to mediation prepared to run the damages calculation under multiple scenarios, based on different assumptions. The parties often present dueling spreadsheets, so it is important to have someone adept with Excel present for the mediation.
In most cases, several variables will factor into the eventual outcome of litigation. These may include the categories of employees included in the class, the amount of time the challenged pay practice existed, the number of hours alleged to be uncompensated, and the applicable pay rates. Each of these is a lever that can be pulled in the negotiation of settlement. The best-prepared litigants show up at mediation ready to show how adjusting each variable will affect the bottom line.
#3: Remember the Court
It’s not enough to make a deal with the other side. In wage and hour class/collective cases, the Court is going to have to approve the settlement. In this way, the Court looms over the mediation like a silent party, one who is not participating but whose signoff will be essential.
For this reason, while there is a certain aspect of horse trading in any mediation, the need for court approval provides context to what in other cases is merely positional bargaining. What will be done with the remainder of settlement funds not disbursed to class members? What amount shall be allocated for attorneys’ fees? How will the settlement be allocated for tax purposes? As to these and other deal terms, the judge may not be satisfied even if all the lawyers agree.
Working with an experienced mediator will give the Court some assurance the settlement is the product of a genuine arms-length negotiation. In many courts, it is easy to look up settlements the judge has approved in the past (or not!) There are few things more persuasive in mediation than when one party is arguing for a particular term, and the other side can point to a prior case where the judge has rejected it.
Wage and hour class/collective cases can be tricky even for lawyers with extensive experience in other aspects of employment law. With the right preparation, parties can give themselves the best chance to succeed at mediation. Key takeaways:
- Mediate at the right time, neither too early nor too late. The best time is after substantial discovery but before class certification or briefing of dispositive motions.
- Prepare your damages calculations in such a way that you can readily adjust the variables. Bring your Excel specialist to the mediation.
- Pull the judge’s prior orders on motions for approval so you will have a sense what will fly, and what will not.
ABOUT STEVE DUNN
Before devoting himself to dispute resolution full-time in 2019, Steve Dunn practiced employment law in Charlotte for over 20 years. His practice included FLSA, wage and hour, trade secrets, non-competes, and all forms of employment discrimination. Representing diverse clients from individual executives to Fortune 500 companies, Steve worked in industries including financial services, education, manufacturing, technology, construction, marketing, retail, and motorsports.
As a mediator, Steve is persistent and engaged, tirelessly advocating for resolution before, during, and after the mediation.