There have been a host of intern cases of late, the theory being that these individuals were actually doing productive work, acting as if they were employees, and were not paid for their labor that facilitated the particular company’s business. In another example of this phenomenon, Sirius XM has just settled a putative FLSA collective action for approximately $1.3 million. The case is entitled Tierney v. Sirius XM Radio Inc. and was filed in federal court in the Southern District of New York.
The suit was filed in April 2014, with the fundamental allegation being that these folks performed work that was vital to company operations and received neither academic credit or (at least) the minimum wage. As usual, a good chunk of the settlement monies ($300,000) goes to the plaintiffs’ counsel. (This is one of the biggest threats/dangers in a FLSA case for the employer, the fee-shifting nature of the statute). More than 1,800 interns will actually share in the proceeds of the settlement.
In an interesting twist, the first named/lead plaintiff was removed after she “became unexpectedly unwilling to produce responsive documents or to participate in her deposition,” as set forth in the settlement. A good deal of discovery had been taken and there were numerous settlement conferences, which provided a reasonable basis for the Court to approve the settlement.
Yet another interesting twist was to tie the compensation for opt-ins into a formula based upon the number of Sirius XM “internship sessions” that a person attended during a given span of time during 2008-2015 depending on the office in which the intern worked. Thus, there was no need to make specific, individualized determinations as to how many hours were actually/supposedly worked by each intern.
Using formulas is an expedient methodology to effect a settlement of a collective or class action, especially (and obviously) in situations where neither time records have been maintained or there exist hundreds, or thousands, of time record documents to sift through to arrive at “accurate” determinations. The formula method is a much cleaner way. I have used this method myself a number of times to bring a settlement to finalization, so as to avoid hours of negotiations about who should get what.
This also makes it easier for a Court to approve a settlement (and there have recently been a rash of cases where federal courts did not approve settlements). The last thing the parties, especially the defendant-employer, want is for a settlement to fall through or not be approved because of uncertainties or arguments about the compensation due to the opt-in employees.