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Wage and hour claims creating headaches

Employers paid a record $220.6 million last year due to investigations by the U.S. Department of Labor. The majority of these charges were payments for back wages under the Fair Labor Standards Act (FLSA), a statute which deals with required overtime pay for employees.

Employers want to avoid these cases because they come with liquidated damages, attorney's fees and, under Massachusetts law, as recently clarified by an act of the Legislature, mandatory treble damages. The imposition of attorney's fees in particular often leads to lopsided results. Consider the New York case where plaintiff prevailed on her overtime claim and was awarded $1,774 for overtime wages. Her lawyers claimed they were owed $340,000 in fees. The district court reduced the attorney's fees to $49,000 which still dwarfed the amount of money actually in contention. (Barfield v. New York City Health and Hospital Corp.).

Employers should be sensitive to the following hot topics in wage and hour compliance:

• Rest and meal breaks. Wal Mart recently paid 31.9 million in back wages to its employees. Employees claimed they were regularly asked to work through paid breaks. These breaks were held to be protected fringe benefits and therefore compensable;
• Travel time and work from home. The U.S. District Court in Massachusetts held that insurance appraisers performing work on laptops before and after daily work shifts were owed compensation for the time; and
• "Joint employer" doctrine and the implications for employers who hire people through agencies. The Barfield case referred to above addressed a certified nurse's aide who worked for a hospital through three different agencies, sometimes racking up more than forty hours per week through a combination of the three agencies. The hospital was considered the employer for purposes of the FLSA and therefore liable for her overtime (and, perhaps more importantly, her attorney's fees).

OCM recommends regular audits to ensure compliance under Massachusetts and federal law and we are available to address any questions or concerns you may have.

Judges are People Too

A recent study applied contemporary psychological research techniques to a sampling of judges and found that the judges are subject to the same psychological biases and mistakes as everyone else. See Chris Guthrie et al, Blinking on the Bench: How Judges Decide Cases, forthcoming in the Cornell Law Review, and currently available for download here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1026414#PaperDownload

The researchers offer three examples that are particularly interesting for practicing litigators:

1. Judges are subject to a phenomenon called "anchoring," which describes a person's tendency to have the starting place for a numerical estimate, such as a damages award, affect the final estimate. In this study, judges who were told the plaintiff's lawyer demanded $10 million awarded much higher damages to the plaintiff.
2. Judges tend to undervalue statistical information, but overall performed much better than average. When confronted with a classic English case, Byrne v. Boadle, which involved analysis of the likelihood the defendant was negligent, only 40% of the judges came to the correct conclusion. Forty percent accuracy was nevertheless more than twice as good as a group of doctors performed on an analogous medical problem.
3. Judges are vulnerable to the "hindsight bias," which is the "tendency to overestimate the predictability of past events." The judges, however, were less likely to be affected when the issue was more complex.

The authors' recommendations for dealing with these issues focus on getting judges to engage in deliberative reasoning rather than relying on intuitive judgments. Reading the results of these studies can be slow going, but the core insights are useful to the courtroom practitioner.