In the news, we hear about class action cases and the large settlements and verdicts that can result. What, exactly, is a class action, and why can the verdicts and settlements be so large? A class action is a procedure that allows one or more plaintiffs to bring an action on behalf of a larger group that has claims similar to those of the plaintiffs named on the lawsuit complaint. Even when the claims of the Named Plaintiffs are relatively small, if the group represented by the plaintiffs is large enough, the total damages can be very large after all the similar claims and damages are added together.
One common type of class action is a wage claim case. For example, assume that an employer has its 500 employees clock-out at the end of an 8-hour shift and then has them clean up the work area before they leave for the day. Also assume that the clean-up takes about 15 minutes. In many cases, the unpaid time would be overtime if the overtime rules are similar to those in California. In California, overtime claims can go back as far as 4 years. If one employee files a suit to get unpaid overtime, that employee would get one hour and 15 minutes of overtime for each five-day work-week. After 4 years, the employee would have a claim for about 250 hours of unpaid overtime. If, instead, that employee files a class action case, the number of unpaid overtime hours for all 500 employees would be about 125,000. Depending on what the applicable overtime rate is, the employer could owe more than Two Million Dollars.
In the above example, the lawyers would probably also claim that the employees were not paid minimum wage for the 15 minutes they were off the clock. That claim could cost the employer more than another One Million Dollars. The lawyers would probably allege other wage violations that would each have significant value. They would also ask the Court to order the employer to pay their attorneys’ fees and give the Named Plaintiffs a monetary enhancement for pursuing the case. Now you can see why class actions can have such large dollar values.
Some of the most recently famous class actions have been filed against Uber. As most of you know, Uber is a ride sharing platform that connects drivers, who drive their own cars, with people who need rides. In the major California class action, (O’Connor et al. v. Uber Technologies Inc., case number 15-17420), Uber claims that the drivers were independent contractors. Independent contractors do not have the right to overtime, minimum wage, meal periods, rest periods, reimbursement of expenses, tips, and other rights that employees have. In contrast, the drivers claim that they are employees and, consequently, are entitled to tips collected by Uber and reimbursement of driving expenses. The Court certified the case as a class action and rejected a $100 Million Dollar settlement because it was too favorable to Uber.
In the O’Connor case, Uber also claims that many of the potential class members had waived their right to take part in class actions. That case, and another related federal case, are on appeal before the Federal Ninth Circuit to address: (1) Are Uber drivers employees? and (2) Did many of the drivers waive their right to class action relief?
Uber faces five major class actions that are now stayed by the O’Conner Federal District Court. Each case claims slightly different damages, but each has similar questions related to the employee/independent contractor issue and the class action waiver issue. The Ninth Circuit will speak to those issues when it rules on the two federal cases before it.
S. Ward Heinrichs, Esq.
Employment Law Office of Ward Heinrichs
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 408-7543 (fax)