Reports of multimillion-dollar settlements of class (or “collective”) actions under the federal Fair Labor Standards Act of 1938 [FOOTNOTE 1] have been so rampant that the casual observer could be excused for believing that, for employers on the class action front, the news is dismal. Surely, the evidence is hard to ignore.

Just last week, IBM agreed to pay $65 million to settle a claim that it failed to pay overtime to technical and support workers who alleged that they had been misclassified as exempt employees. Not atypical of these blunderbuss cases, the plaintiffs also claimed that the misclassifications led to reduced pensions and benefits in violation of the Employee Retirement Income Security Act and that the misclassifications violated the labor laws of 15 states, including New York, Connecticut and California.[FOOTNOTE 2]