I blogged about this case a few weeks ago and opined that the employer would have an uphill fight. Maybe they heard me. The case has now been put in abeyance as the parties seek to work out a settlement. This initiative follows my thinking in many of these cases—try to get out early and as cheap as you can (especially if, as the employer, you perceive you have exposure). The case is entitled Werman et al. v. Rotonda Golf Partners LLC and was filed in federal court in the Middle District of Florida.
The proposed collective action was based on the theory that employees were forced to work off the clock and were therefore not paid proper overtime. The lawyers filed a joint motion last week asking for a stay so they could discuss settlement. The case is now in abeyance until October 7.
The joint motion noted that “the parties respectfully submit that it would be most efficient for the parties to spend their time and limited resources working toward a mutually agreeable settlement rather than responding to the amended complaint, filing a case management report, engaging in discovery and engaging in motion practice relating to, among other things, the overtime exemption asserted by defendants.”
The protocol agreed on will include letters being sent to the employees so they can opt in if they choose. The defendants then have to provide the payroll records to the plaintiffs’ lawyers so they can “reasonably necessary to determine whether, as plaintiffs allege but which defendants deny, compensation is owed to the opt-in.”
The suit alleges that employees were directed not to punch in when they got to work and to keep working after they punched out. The employees allege that they received two paychecks that showed only a portion of their hours worked. They also received part of their monies as “employees” and then received the rest of their pay through a 1099, i.e. as independent contractors. The workers contend that they were intentionally misclassified so the employers could avoid paying overtime.
This is a big step forward in resolving this litigation and it will dramatically cut down the litigation fees which the employer would have to spend and avoid inflating the adversary’s fee petition/demand.
It appears to me, as a management side practitioner, that this is the right strategy. The most crucial thing is to fix what was broken—treating people as W2 employees and 1099 independent contractors in the same work week(s) smacks of deception and an intent to avoid payment of overtime. Off-the-clock cases are very bothersome, especially when the evidence suggests that there was a focused, management effort to order people to work off-the-clock.
A sand trap, but there is a way out…