Labor & Employment Law

Diamonds In The Rough: Class Action Against Jeweler

By Mark Tabakman

An hourly paid employee has sued Helzberg's Diamond Shops Inc. in a Fair Labor Standards Act class action alleging that the jewelry store failed to pay proper overtime. The employee alleges on behalf of himself and others similarly situated that the employer did not pay for time worked during lunch breaks, for which the employees were required to punch out and then punch back in. The case is entitled Clark v. Helzberg's Diamond Shops Inc. and was filed in federal court in the Middle District of Florida.

The named plaintiff, Clark, worked as a sales associate as well as an Assistant Manager at a Jacksonville, Florida store but he seeks to represent all employees deemed to be similarly situated not only in Florida but throughout the United States. The Complaint seeks to go back three years, based on the allegation (made in all FLSA actions) that the violations were 'willful.'
The company operates more than two hundred retail stores in all fifty States, so the possible liability is enormous (as well as the costs of defending the lawsuit.).

The Complaint also seeks liquidated damages, which is a doubling of the damages that are assessed as back-due wages. Naturally, the Complaint also seeks attorneys fees, which could be enormous, especially the longer that the case proceeds and the more discovery engaged in (e.g. depositions taken possibly in many states.)

These working time class actions, especially those alleging work done notwithstanding that the employee(s) had punched out, are extremely dangerous and extremely hard to defend because it will be difficult to prove or even remember whether employees in Florida or anywhere else actually worked through their lunch periods, especially when the evidence suggests that they did not, i.e. punch out/punch in.

This need for individual assessment and scrutiny, however, may be the Company's salvation in defending the case, as I have often written. Where individual assessment is necessary, particularly in the absence of a companywide policy or practice showing that such work time was required, a class action will fail because of that need for particularized study of many (i.e. thousands) of employees scattered throughout the nation.

Another tactic—make an Offer of Judgment for the named plaintiff, early on in the case. That would moot the case if it accepted and if it is not, the Company can move to dismiss under the Federal Rules This advice is coupled with an even more stringent admonition—if you are doing something wrong, fix it, so the plaintiff's lawyers cannot simply substitute in another named plaintiff when they accept the Offer.

Full post as published by Wage & Hour - Development & Highlights on February 22, 2011 (boomark / email).