Collective Action/ Wage and Hour

Approximately fifty current and former employees sought a collective action for unpaid overtime. The federal court denied certification as a collective action and the case was mediated as fifty separate claims. The demand for settlement included 50 separate demands but the response from the defendant was for a lump sum to settle all claims. The initial issue mediated was the template or format for settlement and the discussions proceeded on parallel tracks for a period and then eventually morphed into a lump sum approach. One key to the settlement was the designation and participation of a small representative group of claimants, which group negotiated with the company and agreed upon a settlement that would be recommended to the whole group. A confidential session was conducted in the mediation context in the formal of a “town hall meeting” at which time the proposed settlement was presented and questions addressed to all the claimants. The mediator addressed the group on issues of process and then left the meeting. Plaintiffs’ counsel, because their focus and negotiation at the start of the process was on an individual settlement basis, had met with each plaintiff and early in the process ascertained that claimant’s “bottom line.” Those bottom line amounts were not shared internally in the claimants group and the amounts were then used to compute percentages which each claimant would receive from the final gross amount. The settlement approach required the small representative group of claimants to negotiate the best result they thought attainable and required the defendants to then commit to pay that amount if all claimants accepted his or her pro rata share. All claimants accepted and the fall back alternative of a “blow up” threshold of claimants accepting was not needed.