You’ve Been Hit with a Class Action. Now What?

Don’t panic.

The fact that you have been sued does not mean that your company’s existence is now threatened, nor does it mean that you have to get out your checkbook to cut a large check. All it means is that someone has found a lawyer and made allegations, just as plaintiffs’ lawyers have done against thousands of companies across the country. Often, the complaints in those lawsuits are boilerplate, with the same complaints used against employers in entirely different industries.

A wage and hour class action can take many forms.

Once you learn of the complaint or potential action, you’ll want to engage counsel to help you determine the next steps.

What are the first few steps an employer should take?

  1. Make sure that information about the lawsuit ends up in the hands of the right in-house and outside counsel.
  2. Identify the core working group that's going to be responsible for handling the matter.
  3. Look closely at the allegations in the complaint, and get a sense of the realistic exposure presented by the matter.

What else should you consider early on?

After you’ve taken initial steps, counsel can help you make decisions to craft the most appropriate litigation and business strategies to mitigate risk. These are all important decisions but, absent unusual circumstances, they are not decisions you will need to make within hours or days of becoming aware of the complaint.

Litigation strategy questions to consider include:

  • What documents should be preserved?
  • Who should be interviewed?
  • Should the case be in federal or state court?
  • Should the case be in another venue?
  • Would it make sense to challenge the complaint through a motion to dismiss or a motion to strike?
  • Is there an arbitration agreement that could operate to dispose of the class and/or collective action claims?

Strategic Business Decisions

The management of communications, both external and internal, and the decision whether or not to change existing practices or procedures while the litigation is pending are two of the biggest and most common business concerns that result from wage and hour class and collective actions.

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