Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) 181 does not have carte blanche to communicate with putative class members any way it desires. Rather, courts are empowered to limit such communications where the employer engages in conduct that has been coercive or misleading. One area where there is great potential for an employer to be accused of coercive conduct is where the employer attempts to settle a case directly with individual employees who are within a putative class in an ongoing class action. Because current employees may fear for their jobs or future career prospects if they do not cooperate with the employer, there is at least the potential for coercion when an employer tries to settle individually. At the same time, an employer may seek to resolve a case on fair terms in situations where a plaintiff’s counsel has staked out an overly aggressive position on class settlement. The law must strike a balance between promoting genuine settlement efforts and employee coercion. The proper steps that an employer should take to ensure that their settlement efforts are seen as non-coercive were discussed in In re M.L. Stern Overtime Litigation.898 Among the steps the court suggested an employer should undertake to ensure its settlements will be enforceable include: • Preparing a handout that explains the case in neutral terms, and is up front about the fact that the employee may be able to obtain more money than the settlement offered by pursuing the class action. • Providing each putative class member with a copy of the operative class action complaint and letting them know that they can contact plaintiffs’ counsel to discuss the case if they so desire. • Reassuring employees that they have the right to participate in the class action rather than agree to the settlement, and that they will suffer no retaliation if they choose to participate in the class action. • If a settlement agreement is offered to the employee, the employee should be given a reasonable period of time (several weeks) to consider the offer and discuss it with counsel of their choice.899 The Labor Code also includes extra protections for employees to prevent them being coerced into waiving their wage claims for less than the claims are truly worth. Labor Code section 206.5 provides: “An employer shall not require the execution of a release of a claim or right on account of wages due . . ., unless payment of those wages has been made.” Section 206.5 goes on to provide that any release obtained in violation of the section “shall be null and void as between the employer and the employee.” Before 2009, there was some ambiguity whether this language precluded enforcement of any settlement of a claim for unpaid wages where the employee could prove that the amount received in settlement was less than the total amount the employee was owed. In 2009, however, two decisions clarified that the protection in Labor Code Section 206.5 applies only to releases obtained where there was no genuine dispute over the wages owed.900 In from interviewing “aggrieved employees” in connection with a PAGA claim, finding that no attorney-client relationship existed between plaintiff’s counsel and those employees). 898 250 F.R.D. 492 (S.D. Cal. 2008). 899 Id. at 498-500. 900 Chindarah v. Pick up Stix, Inc., 171 Cal. App. 4th 796, 803 (2009) (individual settlements enforceable when they involve “a bona fide dispute over wages already earned,” settle “a dispute over whether [the employer] had violated wage and
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