Best Ohio Wage And Hour Attorney Answer: How will my employer respond to my overtime case? What is an offer of judgment? Can my employer ruin my overtime case by cutting me a check?
I just got off the phone with an attorney, a very bright professional one even though she works for employers. In our federal overtime claim, she threatened to make an offer of judgment under Federal Rule of Civil Procedure 68 to put my client at risk. She added that this would be the second time that she had used that mechanism in her career. So let’s examine, the effect of this federal court tool (which is not available in Ohio courts) and why it is used so infrequently by defendant employers, particularly focusing in on wage and hour claims.
Under the Fair Labor Standards Act (“FLSA”), employers must pay all covered, non-exempt employees time and a half their hourly wage for all hours worked over 40 in a given week. You would be amazed, however, at just how many employers violate this legal requirement, often willfully. Indeed, our overtime law attorneys have had several cases in which the overtime violations were so widespread that a collective action was appropriate.
Many of our clients with overtime claims wonder what will happen once we file a lawsuit on their behalf. Because overtime cases require the employer to pay attorneys fees, and because a collective action can become very expensive for an employer, we are seeing more and more employers use aggressive tactics such as an “offer of judgment” to attempt and “moot” our clients claims, or to prevent a collective action from going forward.
To the uninitiated, an offer of judgment sounds pretty good. In essence, the employer is saying that is willing to have the court enter a judgment against it for a certain amount of money. And, the clear downside for the employer is that there will be a public judgment in which it admitted that it violated the law. This may affect the employer’s credit rating and insurability, and can be used as an admission in subsequent cases against that employer. Indeed, if there are other pending claims in that same lawsuit, such as a race discrimination claim, the offer of judgment can be used as conclusive evidence that the employer took an adverse action against the employee by admittedly docking him or her pay.
How can the employer letting you win be so bad? The devil is in the details.
If you do not accept an offer of judgment, and recover less from a jury, your right to attorneys fees is cut-off and cost may be owed to the defendant that offered judgment. However, a defendant employer does recover its costs if a defense verdict is awarded. Moreover, employers will often attempt to use such an offer to cut-off your collective action.
Why you should care about things like attorneys fees and collective actions? Leverage. An employer does not have to (and rarely does) offer employees what they are actually owed through an offer of judgment. Instead, employers will typically offer a “low-ball” figure. The reason for this is because usually, the employer does not expect you to take them up on the offer, but they want to remove any leverage you would otherwise have to make them pay you the full amount you are owed. The threat of attorneys fees and the high cost of defending collective actions provides a plaintiff with a lot of leverage to get what they are owed, and employers want to force employees to take less by undermining this leverage.
The above defense strategy is known as the “pick-off” strategy, and has really taken off since the United State Supreme Court‘s ruling in Genesis Healthcare Corp v. Symczyk. In Genesis, the employee, Symczyk, was owed about $7,500.00 in unpaid overtime wages, and she brought a collective action when Genesis refused to pay. Genesis then used the pick-off strategy early in the case, offering Symczyk a $7,500.00 offer of judgment. When Symczyk did not respond to the offer, Genesis moved to have her case dismissed as moot, because her claim had been fully satisfied. Symczyk opposed the motion. Although Symczyk did not dispute that the $7,500.00 satisfied her claim (which in our opinion was a critical error), she argued that her case could not be dismissed because she still had a collective action. Nonetheless, the trial court dismissed Symczyk’s case, and the Third Circuit Court of Appeals affirmed the dismissal.
Once the case got to the Supreme Court, it was affirmed. However, the case was upheld on very narrow grounds – the Supreme Court merely held that once the primary plaintiff in a collective action has had their claim mooted, the collective action cannot survive.
When Genesis came down, many employers jumped at the opportunity – all they had to do in a FLSA collective action case was make an offer of judgment, and their risk would be significantly reduced. The problem with this approach, however, is demonstrated where the employers desire to pay as little as possible, and the Supreme Court’s failure to address whether Symczyk’s claim was actually mooted, meet.
In Genesis, Symczyk never argued that the $7,500.00 was not enough to satisfy her claim. As a result, the Supreme Court assumed it was, and limited its holding to the collective action issue. As a result, if an offer of judgment is not enough to satisfy a plaintiff’s claims, it will not moot anything. (Again, a critical error).
The recent decision in Velasquez v. Digital Page, Inc. demonstrates the limited reach of an offer of judgment in FLSA cases. Shortly after the case was filed, the defendant employers filed an offer of judgment, which the plaintiffs expressly rejected as being inadequate. When the plaintiffs later moved to certify their collective action, the defendants moved to dismiss the action by arguing that, as in Genesis, their offer of judgment mooted the plaintiff’s claims. However, the court rejected the defendants argument, finding that the plaintiffs rejection (rather than ignoring) of the offer of judgment did not render the action moot:
In Genesis, the district court found that plaintiff’s claim was moot. No party appealed that finding, and the Supreme Court therefore accepted, as a matter of fact, that the Plaintiff’s individual claim — the only claim in the lawsuit — was moot. Here, unlike in Genesis, the record fails to indicate conclusively that the individual claims of each Plaintiff (including that of Nazario) have been made moot because of Defendants’ Rule 68 offers. The Plaintiffs have not only rejected the offers, but each has also disputed their sufficiency. These distinguishing facts render the decision in Genesis non-dispositive.
Moreover, the Supreme Court’s specific assertion in Genesis that it was not deciding the broader issue of whether a rejected Rule 68 offer would always render a plaintiff’s individual claim moot also renders that case non-dispositive. As specifically stated by the Supreme Court in Genesis, “[w]hile the Courts of Appeals disagree whether an unaccepted offer that fully satisfies a plaintiff’s claim is sufficient to render the claim moot, we do not reach this question, or resolve the split, because the issue is not properly before us.”
Despite this, employers who make offers of judgment continue to make low-ball offers that arguably do not satisfy plaintiff’s claims, effectively making the “pick-off” strategy of limited value. As a result, the more things change, the more they will stay the same, and collective actions will continue to be growing area of litigation.
If you believe that your employer is not paying you all of your wages for all of your lawfully earned overtime compensation at a rate of one and half times your normal wages as requires under the Federal Fair Labor Standards Act or Ohio Minimum Fair Wage Standards laws or you are an nonexempt employee that has been misclassified as exempt or independent contractor, contact the attorneys at The Spitz Law Firm today for a free and confidential initial consultation. The wage and hour lawyers at The Spitz Law Firm will provide you with the best options for your overtime pay dispute situation. If you even think that you may be entitled to overtime pay that you are not being paid, call (216) 291-4744.
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