On October 18, 2010, Baxter Healthcare Corporation became the latest healthcare employer to settle a wage and hour class action. Ten months after a group of California lab technicians sued Baxter, alleging they were improperly classified as exempt employees, the case settled for $2.6 million. After fees, costs and other administrative expenses are paid out, the remaining settlement fund will be shared by 249 alleged class members.

In their Amended Collective and Class Action Complaint, Sayaman v. Baxter Healthcare Corporation, Baxter’s lab technicians claimed they worked a minimum of 12 hours overtime each week, including working through their meal and rest periods, but were denied overtime compensation because Baxter classified them as exempt employees. According to the parties’ motion for preliminary approval of the settlement, whether these lab technicians were actually misclassified was far from clear. The plaintiffs contended that they performed nonexempt labor. They conceded, however, that there was also some support for Baxter’s position that the lab technicians were exempt professionals because they performed advanced scientific work, or, in the alternative, qualified for the administrative exemption, because they engaged in work directly related to the company’s general business operations.

In their Amended Collective and Class Action Complaint, Sayaman v. Baxter Healthcare Corporation, Baxter’s lab technicians claimed they worked a minimum of 12 hours overtime each week, including working through their meal and rest periods, but were denied overtime compensation because Baxter classified them as exempt employees. According to the parties’ motion for preliminary approval of the settlement, whether these lab technicians were actually misclassified was far from clear. The plaintiffs contended that they performed nonexempt labor. They conceded, however, that there was also some support for Baxter’s position that the lab technicians were exempt professionals because they performed advanced scientific work, or, in the alternative, qualified for the administrative exemption, because they engaged in work directly related to the company’s general business operations.

The parties wasted little time litigating the claims, however, and instead they delayed certification motions and opted for early mediation. During the July 2010 mediation, plaintiffs’ expert estimated damages to the alleged class to be $4.8 million. The ultimate settlement was approximately half that.

Like Baxter, many companies defending wage and hour collective/class actions often struggle with the decision whether to engage in early mediation to avoid costly litigation, even when they know they have complied with applicable wage and hour law. As wage and hour litigation continues to plague the healthcare industry, employers should consider actions they can take to help ward off litigation, or put them in a stronger position to defend a class or collective action if they are sued. For example, in misclassification cases, a legal opinion regarding the exempt status of employees in a particular position may provide a good faith defense to the otherwise mandatory double damages under the FLSA.

This entry was written by Michele Malloy.

Photo Credit: Bartek Szewczyk