Wage and Hour Case Study

Economic Damages Reduced by 50%

Wage and hour cases are a common form of class action litigation wherein groups of non-salaried workers, usually paid hourly or for shift work, claim that they were in some way underpaid or put at a disadvantage by their employer.

Sometimes, these claims are over missed meal or rest breaks, punch clock or time card rounding errors, or mistakes in paying minimum wage and overtime. Other times, they involve claims for activities that take place before workers clock in, and after they clock out (at which point they are no longer paid.)

Groups of plaintiffs might claim they should be compensated for off-the-clock activities such as “donning and doffing” (putting on and taking off) protective gear, mandatory bag checks, entering and exiting through a buffer zone further into a facility, or other security measures used by companies to prevent theft.

In most of these cases, the off-the-clock time involved for an employee on a single day is small, amounting to a few minutes or less. However, when added up across thousands of shifts, for tens or hundreds of workers, the totals can accumulate quickly–and the defendant in these cases may be looking at millions of dollars in damages. 

The Challenge in Wage and Hour Cases

There are several initial questions in wage and hour case studies, and they all come down to a matter of time. In off-the-clock damages cases, economic experts might wonder how long these activities typically take employees–and how long they need to take. They might ask if employees are going directly to their work stations in a facility, or if they are somehow taking more time to get to their stations, maybe inadvertently. Economists would take into account the time cost of stages that cannot be controlled, such as waiting for computers to boot up, and consider that in their estimate of damages.

The Wage and Hour Case Details

Welch economists worked on a case recently for a company with multiple locations. The company asked us to assess potential damages for a wage and hour suit. Employees were alleging that they were owed compensation for the amount of time between their entry into the facility where they worked and clocking into the payroll system.

In between entering and clocking in, employees had to walk some distance to their work stations. They also had to boot up a computer and log into a system. Once they were logged in, they would be officially clocked in and begin getting paid.

The employees at this company had filed a class-action suit. They were suing the company to get paid for the time from the moment they entered the building until their log-in to the system.


Our Economists’ Approach

We worked with our clients at the company to create a timeline of events for each of the workers on a typical day. We settled on three stages:

(1) Time from entering the building to getting to the employee’s workstation

(2) Time booting up the computer

(3) Time from when the computer was booted up until the employee was clocked into the system

We found that stage 3 did not usually take employees much time. The lost time was in the first two stages. Since the computer boot-up time was automatic, and not in the employees’ control, we assigned an average boot-up time for each employee.

Then, we focused on the amount of time it took employees to get to their work stations and boot up their computers. This time was different for every employee. To figure out how long it took, we tracked multiple employees every day for a month, recording each day how long they took between entering the building and beginning the boot-up sequence on their computers.

Our Analysis

Here is what we noticed: Over the 21-day period in which we tracked the employees, they showed variable amounts of time from entry to boot-up. The shortest period was a bit over 3 minutes. The longest was over 25 minutes. This demonstrated to our experts that some activities were taking place that did not need to be compensated, such as visiting with other employees, checking email, or hanging out in the break room before starting work.

The plaintiff’s expert suggested that the median value, a little over 14 minutes, was an appropriate amount of “compensable time”–meaning, the plaintiffs should all be paid for that time, daily, in addition to the computer boot-up sequence time and then their paid work.

We disagreed. We argued that employees did not need 14 minutes to go to a station and log into a computer. However, we also knew that 3 minutes was too short–it would require employees to be constantly walking at an abnormally fast pace. We argued successfully that the 5th percentile measurement, a little over 7 minutes, was a reasonable amount of time for employees to be paid. 

Results of the Wage and Hour Case

Welch Consulting ended up using these same calculations across all the company’s call centers, in multiple locations, for all employees. These calculations resulted in similar reductions in estimated compensable minutes.

Our successful argument to reduce the estimated damages from the median amount of time (suggested by the plaintiff’s expert) to the 5th percentile amount was a huge win for the defendant! It reduced the economic damages to be paid by the company by approximately 50%.

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