“Class action” is a pretty scary term. We hear about these types of cases constantly in the news, usually accompanied by a quick blurb about how a company is paying out millions of dollars in judgment or settlement. But what exactly are class actions and why should the everyday, small business owner be concerned?
At its most basic, a class action is a type of lawsuit in which the claims and rights of several people are decided in a single case. Most plaintiff’s bringing the action are never named in the suit, except a few to act as the “class representatives” whose names will appear on all pleadings filed with the court. Class actions can be wonderful because they allow people whose damages are too small to bring an individual lawsuit to try their cases together Further, sometimes class actions are the only practical way to stop illegal practices. Historically, class action suits have allowed individuals to stand up against the most powerful industries nationwide for deceptive practices and procedures. However, class actions can be detrimental, driving many companies out of business.
Class actions are filed in numerous areas of law, ranging from securities violation suits, product liability and consumer actions, to employment class actions. Employment class action lawsuits are typically brought on behalf of employees of a company for violations such as unpaid overtime, failure to provide breaks, to workplace discrimination.
Why it’s Important to Contact an Attorney at the First Sign of Trouble
As a small business employer, it is important to know how class actions work and how they could harm your bottom line. It is also incredibly important to know how to avoid them altogether.
First, class actions are like a regular lawsuit but on steroids. There are multiple plaintiffs, typically between 30-50 individuals. This means that litigation can quickly get out of hand with investigative work, i.e., discovery. It’s extremely easy to be buried in paperwork early on defending a class action. You will want to retain an attorney immediately and come up with a detailed litigation plan to attempt to eliminate any “sprawl,” essentially streamlining the case down to only what is needed. It’s extremely easy to not see the forest through the trees so to speak in a class action suit. Not having a litigation plan in place early can cost you and your business thousands of dollars.
Second, class actions are incredibly expensive to defend. Remember those 30-50 typical class members I discussed above? Each one of those individuals has claims against your company. There is a lot on the line for you defending a class action. You will want to hire an attorney knowledgeable about class actions and the area of employment law. Because employment law deals with a lot of statutory fines that are already established, it is easy to get an idea of how much a potential judgment could be early on. It is also important to realize that in most situations, the Court must approve any settlement you agree to with the parties. Meaning, if the judge doesn’t think your proposed settlement is “fair enough” for the class action members, he can send you back to the drawing board. Knowing and understanding these issues is vital to any small business owner.
Third, class actions can be pending for years. With the Court budget reductions nationwide, cases are sometimes lingering for several years before ever being heard for trial. Thus, a class action can be the rain cloud over your head for as long as four or five years.
Given all of this, business owners should take proactive steps to ensure they are not hit with a potential class action. Follow all labor codes within your state. You will want to make sure all employees are accurately paid all wages owed and taking all proper meal and rest breaks. This list is not all inclusive as there are numerous labor codes. Having an attorney who can guide you through the employment law landscape before you get served a class action could save you millions in the long run.
If Your Business is Involved in an Employment or Litigation Issue that Could Turn into a Class-Action, Our Attorneys Can Help
If you are unsure whether or not you might be exposed to a potential class action, take the proactive approach and contact Bellatrix PC today at (800) 449-8992 for peace of mind.
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