Collective Actions: Where wage & hour liability is made manifest.  Typically, wage & hour violations manifest as permissive class/collective actions which are inherently punitive to employers by design and structure. The more significant punitive aspects of collective actions follow:

• Permissive Class Certification: A “conditional” class certification process only requires two current (or former) employees to file short-form affidavits simply alleging wage violations. Once the affidavits are filed, the courts are statutorily obligated to grant “conditional” certification.  Accordingly, the court system is clogged with frivolous collective actions; and yet, countless new collective actions of questionable merit are filed every day.

Note:  As plaintiffs’ attorneys know that the employer will be ordered to pay their fees should their client be awarded one cent of back wages, they have no incentive to settle except on very favorable terms.

 • Statutes of Limitations: Federal and State statutes of limitations combined start from the date of the last violation and may continue from five to seven years;

 • Even When the Employer Wins, It Still Loses: Even if the employer wins the collective action, it will likely suffer significant financial harm resulting from cost associated with the mounting of a vigorous legal defense.

 MISCELLANEOUS LABOR & EMPLOYMENT LIABILITY:  Every business is beset by labor and employment liability which may manifest as legal action at any moment.  Exposure to such liabilities can never be completely eliminated but it can be effectively reduced, containedand managed resulting in low-risk exposure maximizing the business’ value.  The solutions identified herein not only address wage & hour liability but also every form of labor and employment liability uncovered by our recommended audits. Ultimately, any significant labor and employment liability will be uncovered during the sale due diligence process.  Therefore, we recommend that the Company resolve these issues proactively.  The types of labor and employment liabilities usually revealed by our audits include without limitation: 

[1] Conditional certification is typically granted in the first two months of the action.

• Audits Regarding Present Liability: These audits will cover:
  • All current employees who may expose the Company to Present Liability;

• These audits will simultaneously cover the Company’s exposure to miscellaneous labor and employment liability.

• Present Liability Solution – Voluntary Compliance with Immediate Payment of Back Wages: If Present Liability is revealed by the audit, we recommend voluntary payment of back wages to the affected employees. If fact, the law requires payment of back wages.  We have proven solutions that ensure back wages are paid while simultaneously obtaining protections from legal action by aggrieved employees.  Features of our Present Liability Solutions include:
  • One-on-one meetings with each aggrieved employee for purposes of:

• • Explaining that the payment error was revealed during a routine audit, and the Company took this action to immediately correct it;

• • Evaluate the litigious capacity of each aggrieved employee and take appropriate measures to ensure that any potential for adverse legal or administrative action is contained.

• Obtaining admissible affidavits that affirm:

• • The only wage violation that employee has suffered is the one the Company brought to his/her attention; and

• • Upon payment of back wages, employee affirms that he/she has suffered no other wage violation.

• Built-in Compliance and Oversight: Part of our Present Liability Solution includes implementation of best practices that if followed, will prevent future Present Liability and related violations.

• Audits Regarding Residual and Hidden Liability: These audits will cover:

• • All former employees who expose the Company to Residual Liability during the relevant statute of limitations period(s).

• • All current independent contractors who may be misclassified.

• • All current employees who may be misclassified.

• • Audit of miscellaneous labor and employment liability will be conducted simultaneously.

• Residual Liability Solution – Voluntary Compliance “Partnership” with DOL: If Residual Liability is revealed by the audit, we will recommend voluntary payment of back wages to the affected former employee. If fact, the law requires payment of back wages.  We have proven solutions that ensure back wages are paid while simultaneously obtaining protections from legal action by aggrieved former employees.  If the Company owes back wages, we recommend that we voluntarily involve the DOL in the back wage payment efforts and request that DOL issue the Company WH-58 Waivers barring the aggrieved former employees from future legal action regarding this issue.  NOTE: We cannot guarantee that the DOL will issue WH-58 waivers but to date, we have had a 100% success rate.  Our success in this regard is due to the great respect Jorge Rivero has at the DOL as a former Division Chief of the Wage & Hour Section.
  • Alternate Residual Liability Solutions: Payment of back wages can be accomplished without the involvement of the DOL but it is a much more complicated process and depending on individual circumstances, may pose a greater threat of adverse legal action by the affected former employees. While we cannot make any guarantees, we currently have a 100% success rate of conducting non-DOL voluntary back-wage payments without triggering any adverse legal action. 

• • Built-in Compliance and Oversight: Part of our back wage solution includes implementation of best practices that if followed, will prevent future wage violations and related back wage payments.

• Class/Collective Action Solution For Current Independent Contractors & Those Subject To W-2 Conversion: Implementation of New Independent Contractor Agreements & Related Documents:

To reduce and contain exposure to Hidden Liability created by independent contractors, misclassified employees and/or other problems, we recommend that such problems be corrected immediately.  As for independent contractors, we typically recommend the implementation of our proprietary independent contractor agreements and related documents.

• Our propriety independent contractor agreements and related documents feature:

• • Class Action Waivers;

• • Self-actuating terms that prevent or significantly reduce the potential for misclassification;

• • Self-actuating terms that prevent independent contractors and their employees from engaging in conduct that may create misclassification determinations;

• • Self-actuating terms that require mandatory oversight by independent contractor management to ensure compliance with all material terms including “misclassification provisions” designed to reduce and contain Hidden Liability;

• • Terms that provide employers (or their designees) the right to audit the independent contractor compliance with all material terms with remedy provisions for non-compliance; and

• • Admissible Affidavit(s) that can be used in defense of:
    • Administrative and legal misclassification actions;
    • Wage & Hour collective actions; and
    • Administrative and legal actions for any type of Wage & Hour violation.