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Mediation May Be the Right Tool for Wage and Hour Suits

20130709-221302.jpgThe number of wage and hour suits is up again this year, and the recent increases appear here to stay. If your client’s efforts at compliance didn’t work and your client is facing a wage and hour suit, the best move may be to offer mediation.

Wage and hour suits can be costly in many ways, leading more and more employers to consider mediation. Among the many advantages of mediating wage and hour cases are:

  • Potential time and cost savings. Wage and hour cases are usually fact intensive, and developing a case through discovery and trial can drive the costs high. Because of its informality and because mediation can occur relatively early in the case, resolving a case through mediation can be much less expensive and time consuming.
  • Parties control the mediation process. As compared with the uncertainties associated with litigation, mediation provides the parties with a much higher level of control. For example, the parties usually choose who will serve as the mediator, and when and where the mediation will occur. In addition, sometimes the parties even devise the ground rules and procedures on how the mediation will proceed.
  • Mediators can help find common ground. An experienced mediator can serve as a valuable sounding board, create opportunities for resolution not envisioned by the parties, and can assist counsel in realistically valuing the case.
  • Parties have greater participation in mediation. By giving the parties more opportunity to participate in resolution of the case, mediation may make it more likely that the parties will feel a stake in the settlement and thus result in a more durable agreement and fewer postsettlement disputes.
  • Mediation is generally confidential. Communications and writings prepared for, in the course of, or pursuant to the mediation are for the most part confidential, inadmissible as evidence, and not subject to discovery. Evid C §1119; FRE 408; Rojas v Superior Court (2004) 33 C4th 407, 415, 15 CR3d 643. This allows for confidential settlements in single-plaintiff cases. A significant exception to this general rule is that, in the class action context, the settlement agreement cannot be confidential, because it requires court approval.
  • Mediation allows for flexibility in resolving disputes. Mediation permits the parties to craft their own solutions, including relief that a court might not award. For example, the parties can agree to a settlement that includes provisions for paying money over time and provisions that are most tax advantageous for the parties. However, notwithstanding this flexibility, any such relief that is included as part of a settlement must be approved by the court in a wage and hour class action.
  • Mediation can aid in gaining the court’s approval of a class action settlement. Class action settlements require court approval (Cal Rules of Ct 3.769(a); Fed R Civ Proc 23(e)), and the court must be satisfied that the settlement is fair, adequate, reasonable, and not collusive. In making this determination, courts “give considerable weight to the competency and integrity of counsel and the involvement of a neutral mediator in assuring itself that a settlement agreement represents an arm’s-length transaction entered without self-dealing or other potential misconduct.” Kullar v Foot Locker Retail, Inc. (2008) 168 CA4th 116, 129, 85 CR3d 20.

Of course mediation isn’t always the right way to go. It may be inappropriate if one party is unwilling to settle out of principle, or wants to pursue a test case or establish a binding legal precedent when the law is unsettled. Mediation also may be inappropriate if it would be premature, e.g., the parties haven’t adequately tested the merits of the case through discovery or quantified damages. In addition, the timing of mediation is critical because mediations and settlements in wage and hour class actions undertaken without the exchange of sufficient information are subject to increasing scrutiny by the courts.

CEB covers the mediation process specifically for wage and hour suits in California Wage and Hour: Law and Litigation, chapter 13. On mediation generally, turn to CEB’s California Civil Procedure Before Trial, chapter 45.

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© The Regents of the University of California, 2013. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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