SALTING IN WAGE CASES
My blood chilled at the audacity of the plaintiff’s attorney.
Our client had received a demand letter from him asserting that his client was a representative of a class of employees who were not paid for travel time. The 100 employees in the putative class are employed to perform services at client sites and often travel to three or more such sites in a single workday.
Upon inquiry, I discovered that the employer, while generous with payments for down time, did not track and, therefore, would have great difficulty proving that the employees were, in fact, paid for the time it took to travel between customer calls in a continuous workday. While the employees were probably paid fairly, it would be a problem to prove they were paid in strict compliance with Pennsylvania’s Minimum Wage and Wage Payment Acts, which are similar to the federal wage and hour laws. After calculating that the possible liability to the named plaintiff was only about $500, if any at all, I set up a meeting with the plaintiff’s lawyer to see how we could make the case go away. What he said in that meeting serves as a caution to all employers, not just those with travel time issues..
I started the meeting by stating that, even if he were to prove liability and even if he were to prove that his client is a proper representative of the class of all service employees (both things I denied), the total liability would not be substantial enough to warrant litigation, especially since the employer was prepared to pay the employees in accordance with the law without it. Further, the documents that would have to be reviewed to determine whether there was liability and the amount owed in each individual case were so many that the time necessary to make the determinations would far exceed any lawyer’s normal percentage of the possible recovery, typically about 40%. In short, it would be in his interest to refrain from filing a lawsuit and resolving the issue of his single plaintiff quickly and expeditiously.
The plaintiff’s lawyer told me that he is not interested in the amount of liability and that he believes that the proper measure for his fee is not a percentage of the recovery but the alternative method of calculating a prevailing lawyer’s fee -- the time it took to litigate the case multiplied by his hourly rate. He quickly volunteered that a court recently approved of the use of the alternative method and had found that his $425 per hour rate was reasonable. Then the cold chill. The lawyer continued by saying that he is in the business of finding big document cases in areas of the law where prevailing parties get attorneys’ fees and then running the clock. He added that he knew this would be a big document case because he had a half dozen or so of the client's employees who had been his clients in other cases and had been providing him with information for months. Based on what they had given him, he estimated that the liability would probably be about twice what I had estimated and, because of the way the employer keeps its records and the amount of time that would be necessary to determine what each employee is owed, that his fee would likely be in the $200,000 - $300,000 range. He invited me to make the case as complicated as I could, since the more difficult we made it, the more he would profit. When I expressed shock at the fact that neither any employee nor he, when a possible violation of the law had been first uncovered, informed the employer so that corrections, if necessary, could be made. He smiled.
I was not shocked by the brazenness of the plaintiff’s lawyer. I hate this type of profiteering by our profession as much as employer-victims hate it. Nevertheless, I know that it is part of the current system. What gave me the cold chill is the fact that the plaintiff’s lawyer had a prior relationship with several employees in similar cases and that these employees had been secretly providing him with information (and perhaps creating some to enhance the case) long before any claim was made. Clearly, some, at least, were (and continue to be) salts.
Employers have long been fighting the use by unions of professional organizers as salts to engage in organizing from the inside. In large part, employers have been forced to endure the use of union salts because the National Labor Relations Board and U.S. Supreme Court have held that salts, in most situations, are protected by the National Labor Relations Act. The same be true for salts used by predatory plaintiff’s lawyers in pay practice cases. Not only may the salts be engaged in concerted activity protected by the NLRA, discharging or refusing to hire a salt would risk a retaliation claim under one of the wage payment laws that, in itself, may cause additional expense.
The best protection against plaintiffs’ lawyers and their salts is to understand the complex and counter-intuitive rules under the Fair Labor Standards Act and similar state laws to ensure that employees are paid properly and that your documentation is accurate and adequate. Most vulnerable are pay practices that involve travel time, working in or through break periods and preparation for work (so called “donning and doffing” cases). Many times liability turns not on the practice as much as the employer’s ability to prove that the employee was properly paid based on contemporaneous records.
Thought you would like to know.