As seen in The Legal Intelligencer
According to statistics, 2015 was another historic year for federal wage-and-hour lawsuits. These matters have been increasing since 2000 in both federal and state courts. New regulations and the recent focus on independent contractor classifications will likely keep the number of cases trending upward in the coming years.
Wage-and-hour litigation matters are a primary risk for many businesses—big and small. These matters result from allegations that a business failed to comply with the Fair Labor Standards Act (FLSA) or one of the numerous state and local employment regulations.
The lawsuits that result from wage-and-hour matters can be complex as there are a wide range of issues that can give rise to claims; and the quantification of financial damages associated with the alleged violations is often challenging. While on the surface, the calculation of damages may seem to be straightforward, the reality is that this is often not the case.
Wage-and-hour litigations are often brought in the form of class actions and include hundreds of plaintiffs or potential plaintiffs. Further, the timeframe at issue in the litigation may span many years. The number of plaintiffs along with the timeframe at issue results in large volumes of records that need to be analyzed. In a recent matter that I was involved in, weekly payroll records were produced for over 500 individual current and former employees for a three-year period. This represented hundreds of thousands of lines of data that needed to be considered.
In addition to the volume of data, analyzing damages in these matters requires multiple data points to be incorporated into a model. Data points can include hours worked by type per period, pay rate per period and actual pay, by pay type, per period. Further, the data available may have been maintained in multiple systems and the systems may have changed over time. The result is that actual data may not be consistent and readily comparable. In the example discussed above, hours worked and actual pay were maintained in two separate systems and the system that captured hours worked changed midway through the relevant time period. Changes in systems used or changes in how the system captures the data creates conversion and combination challenges and can impact efficiency of analysis.
A further complication is that the data is often maintained in both electronic and paper format. Paper data creates its own series of challenges including identifying key information from the data and determining how to incorporate this data into other electronic data sources. In a recent matter, a key piece of data in the analysis was only available in paper documentation—it was never captured electronically. As a result, manual processes were required to utilize this information.
In wage-and-hour matters, the complexity of the financial analysis can be formidable. In order to successfully navigate this complexity, it is important to understand the type of claim or claims at issue in the matter and what financial data/records are available. A primary understanding of what data is available and how it was maintained will result in a more efficient approach to the analysis of damages in these matters.
Reprinted with permission from the December 21, 2015 issue of The Legal Intelligencer. © 2015 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.