During the past decade California employers have been besieged by class action lawsuits alleging violations of the California Labor Code, Wage Orders and dozens of other employment laws. Many of the initial lawsuits attacked the exempt classification of retail store managers, often including claims that the employer failed to comply with requirements to provide meal periods or breaks. Faced with the many expensive and disruptive procedural hurdles placed squarely in the path of class action defendants who contested liability, retailers paid millions in settlements, frequently choosing to reclassify as non-exempt even those managers who met exempt criteria in order to avoid repeated lawsuits.
As became clear in my own practice, even victories had fleeting benefits. In 1998, we defeated class certification for a large retail client in a lawsuit alleging that department managers were misclassified as exempt. A few years later we defeated, on demurrer, an identical lawsuit against that same client on collateral estoppel grounds. With the third copycat lawsuit in 2004, the client capitulated. It decided to settle and reclassify the department managers. As the company’s chief operating officer ruefully noted, “I keep winning. But I keep paying.”
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