Wage and Hour Claims Lead to Multimillion-Dollar Settlement

By Scott M. Wich Mar 29, 2017
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Wage and hour claims have, over the past several years, substantially increased. Most often, the claims address issues such as exempt status or improper classification of workers as independent contractors. Less frequent violations, such as improper break periods or wage statements, can also result in significant exposure to an employer, as recently highlighted by a federal district court in California.

Eduardo Nunez worked for BAE Systems San Diego Ship Repair Inc. BAE maintained a shipyard in San Diego Bay, where it performed a variety of work on government and commercial vessels. BAE worked on services related to the U.S. Navy.

Nunez, on behalf of himself and as lead plaintiff of a class action of nonexempt employees at BAE, sued his employer, alleging that he and the other employees were not provided the legally mandated 30-minute meal break period. According to Nunez's complaint, before being released for a break, there would typically be 100 employees lined up to pass through a checkpoint. This caused a delay, in addition to time spent disembarking from the ship and returning tools, all of which allegedly infringed upon the 30 minutes allotted to the employees.

[SHRM members-only HR Q&A: What are the meal and rest break requirements for California employees?]

Nunez also alleged that BAE required employees to purchase clothes and shoes from the company without reimbursement. As such, he asserted, BAE's wage statements were inaccurate. BAE denied all allegations of wrongdoing and participated in extended settlement efforts with Nunez.

The settlement efforts culminated in an agreement to pay a maximum of $2.9 million to settle the claims of up to approximately 1,930 potential class members. In approving the settlement, the federal district court found the potential liability, as estimated by Nunez, to be approximately $11.5 million. However, based on the potential weaknesses of the case, the court found the agreed-to figure to be a fair, reasonable and adequate resolution of the lawsuit.

Nunez v. BAE Systems San Diego Ship Repair, S.D. Cal., No. 16-CV-2162 (Feb. 13, 2017).

Professional Pointer: Wage and hour compliance can quickly become a complicated matter, particularly with regard to state and local laws. A complete understanding of the legal requirements of each jurisdiction in which a company operates, as well as audits to ensure compliance, are essential to avoiding costly liabilities.

Scott M. Wich is an attorney with the law firm of Clifton Budd & DeMaria LLP in New York City.

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