On March 22, 2016, the United States Supreme Court determined that courts can use statistical estimates when establishing liability in class-action cases against companies. A class action lawsuit when a group of people with similar complaints sue the defendant as a group. In this specific case, Tyson Foods, Inc. v. Bouaphakeo, former and current employees of Tysons Food, Inc. filed a class action lawsuit against the company. The employees claimed that they were not properly paid for time spent “donning and doffing”, or putting on and taking off uniforms and/or gear necessary to perform their job duties.
The employees argued that representative evidence and an estimate of time not paid was sufficient to establish Tysons Food, Inc.’s liability on behalf of all 3,344 employee class members. While Tysons Food, Inc. agreed that the employees were not paid for the time they spent donning and doffing, it argued that the provided representative evidence was not sufficient because it would require person-specific inquiries to accurately determine the wages owed. For example, Tysons Food, Inc. pointed out that some of the class members did not incur any loss of wages for donning and doffing, so it was inappropriate to use a statistical estimate on a class-wide basis.
The Supreme Court ruled in favor of the employees and determined that a class action under Federal Rule of Civil Procedure 23(b)(3) (and similarly a collective action under the Fair Labor Standards Act) may be certified even if liability and damages must be established with statistical techniques that presume all class members are identical to the average observed in a sample. The Supreme Court also held that a class (and collective) action may be maintained even if the class contains many employees who were not injured and have no legal right to damages.
What does this decision mean for employers?
Employers defending class actions may no longer be able to defeat class action lawsuits by pointing out differences amongst the class. In fact, employees in class actions may still recover big even if some of the class members have no damages. This decision will likely bolster wage and hour class action lawsuits, which have significantly increased in number every year since 2012.
This decision only affirms how important it is for companies – of all sizes – to ensure that they are classifying their employees correctly and complying with the wage and hour laws. It only takes one disgruntled current or former employee for employers to find themselves defending costly class/collective actions.