Employees are too reluctant to assert their legal rights
My latest cases against Walgreens and Uber show how big business has convinced most employees not to stand up for themselves — and the importance of choosing to do new things to get to new places in life
For the past two years my law firm has been representing California Walgreens Store Managers in court, accepting clients through a dedicated website. We now represent more than 125 of them in Aguilar v. Walgreens. Walgreens pays its store managers a salary, and they do some management work. But not that much, in most cases. Walgreens short-staffs its stores, leaving the managers to make up the gap by spending most of their time doing hourly work — helping in the pharmacy, pushing a broom, stocking shelves, cashiering, etc.
This is legal in many states. But under California law, if you spend more than half your time doing hourly work, you’re not a salaried, exempt employee. It’s a fair rule, and it makes sense. If that’s your situation, your employer owes you overtime if you work it, and money for any rest breaks and meal breaks you didn’t get. Just like everyone else doing hourly work.
Walgreens knows that, but it doesn’t pay its store managers that way. And papers Walgreens itself filed in Aguilar suggest that the total potential value of the case, across all 930 or so eligible Store Managers, is $193 Million.
All cases settle at discount to their maximum potential value, but there’s no need to give away money you worked hard for.
Cases always settle for less than every possible dollar. But class actions often offer companies the deepest discounts — the cheapest legal absolution from their wrongs. If your case isn’t strong enough to hire your own lawyer, or you’re not willing to hire your own lawyer, your claim is worth less. Companies like Walgreens use that reality to settle all claims, together, cheaply.
Aguilar isn’t the only case against Walgreens asserting these claims. Besides our 125+ clients, two other Store Managers hired lawyers. Their lawyers filed a class action called Caves v. Walgreens. The key lawyers representing those plaintiffs usually represent defendants, not plaintiffs, from what we can tell. Maybe that explains why they’ve agreed to a settlement that gives Walgreens a 95%+ discount: Caves is offering Walgreens a classwide release for $6 million, with $1.5 million of it going to the attorneys. In other words. Only $4.5 Million will go to the 930 class members.
As one example, and in rough numbers, one client with an $80,000 salary had claims that worked out to a potential value of $219,231, with additional claims for attorneys’ fees, costs, and interest. The Caves settlement is offering her $6,000 after fees. Even if she nets only 25% of the potential value of her case by opting-out of Caves and sticking with us and paying our fees (which, yes, she plans to do), she’ll still get about 10 times as much with our help.
It’s no surprise Walgreens want to keep what it stole
I don’t wonder why Walgreens wants to keep the money. But I do wonder why fewer than 130 Store Managers have hired us so far, and why 800 others intend to take what looks like a few cents on the dollar for their claims.
At first I thought maybe we were missing something, and our clients’ claims weren’t as strong as we thought. But as we begin to counsel our own clients on whether to participate in the Caves settlement, or instead to opt-out of Caves and stick with us and our many other Store Manager clients, it’s clearer than ever that we’re right. Store Manager after Store Manager confirms to us that he or she has spent more than 50% of his or her time doing hourly work, was never paid overtime, and regularly missed breaks.
In short, Store Managers in California who spent most of their time doing hourly tasks are very probably owed more than ten times what they’ll get from the Caves settlement. Actually, it looks like 33 times as much.
Store Managers planning to accept the Caves settlement also probably don’t realize they won’t see that money any time soon. There will be objections to the settlement that may scuttle the whole deal, because it really is too little money. If not, there will be appeals. The earliest payments, if they happen, are most likely more than two years away.
It’s not just that consumers and employees will often take a few cents on the dollar rather than let a willing lawyer help them. In many cases, they’ll accept zero.
I’m also representing more than 300 current and former Uber professionals, executives and engineers mostly, who Uber shorted by delivering promised stock at the wrong time, in breach of the contract, in a way that dramatically increased the employees’ income taxes (our website for that case is here). It appears that thousands of employees were affected, to the tune of about an estimated $200 million in additional needless income tax due. (You can read a full explanation in a previous article here.) Yet, of those thousands, only about 320 have so far chosen to hire lawyers and insist on being paid as promised.
Why are many people reluctant to hire lawyers and pursue their money from employers who shorted them?
I’m a successful lawyer. I started my career representing big companies. When I started my own firm, I worked my way up from representing the smallest entrepreneurs to again representing larger businesses. I have the luxury of working as my opponents do, for an hourly rate, collected monthly, at low risk. But I usually forgo that work and, instead, spend my time helping individuals — consumers and employees who’ve gotten less than they were promised. This is contingency work. Sometimes I earn more than my hourly rate. Sometimes I earn less. Sometimes I don’t get paid at all. I could do corporate work for cash, make more money, and sleep better. I do this work instead because I like being on the side of the truth, and I like helping the folks who most deserve it.
But it’s hard to help. Not because of my opponents. I know how to win, and I usually do, often litigating against some of the best lawyers in the country. No, the biggest challenge to doing this work is getting consumers and employees to understand what sophisticated business clients know from experience — that when they didn’t get what they were promised they can and should hire a good lawyer, that there is no honor in allowing yourself to be cheated, and there is honor (and tangible benefits) in politely but firmly asserting yourself, and when that doesn’t work in fighting the good fight and holding liars and cheaters accountable in court or arbitration, for yourself and the others they’ll otherwise cheat. This is especially true when you can have a professional do it for you, with no out of pocket cost to you. And that’s the way we usually work.
Big Business uses lawyers but has convinced employees that they shouldn’t.
Most people have no experience with lawyers and the legal system. And big business has acculturated the American public to mistrust lawyers, and to feel bad about asking for what they were promised. It’s a brilliant strategy to allow big business to keep what it steals.
Big business itself makes exhaustive use of lawyers to protect itself against consumers, employees, and competitors, to minimize taxes, and to lobby congress for more favorable laws. They use lawyers to draft the most self-serving contracts possible. They use lawyers to spin events.
Resistance — the ways in which we’re psychologically stuck — holds us back
It’s also hard to help people, including sophisticated professionals, because we are all naturally resistant to being helped if that means doing something new, or acknowledging that we’ve been victimized. We just don’t want to feel or hear it. None of us. Our lives are already stressful.
We also make suboptimal decisions under uncertainty. Daniel Kahneman’s research shows that amateurs are generally incapable of accurately analyzing complex decision situations when the future consequences are uncertain. Instead, they rely on heuristics — shortcuts, or rules of thumb.
Professionals are (or should be) different, of course. I try to explain to clients that I do this professionally, and if I’m willing to take their case on a contingent fee basis and do what may be millions of dollars of work on spec, that gives them a highly expert professional judgment about the risk-discounted probable outcome value of their cases, based on an expensive education, 28 years of experience, and some talent. Also, I’m putting my money, a lot of it, where my mouth is — by foregoing hourly work to do this for them.
In the Uber case described above, many of my prospective clients are brilliant in their fields — software engineers, for example. Relying on their raw intelligence, they rationalize that it doesn’t make sense to seek the tens of thousands of after-tax dollars or more that Uber’s actions cost many of them in breach of their contracts.
For example, some concluded that if my fee is 40%, and if taxes are 50%, there will be 10% left over, so it’s not worth it. They’re busy, and they didn’t read the information we make available on our Uber website, to qualified prospective clients, so they didn’t realize that they’re legally entitled to be restored to the after-tax position they should have been in, and thus to the pre-tax amount necessary to get there. They also didn’t read that, in California, if you have to sue your employer to collect promised compensation, your employer has to pay your attorneys’ fees if you win.
Even if their math were right, by the way, it’s always important to remember that mathematically a chance at 10% of something is infinitely more than the certainty of 100% of nothing. Some of our Uber professional clients have claims worth seven figures, some six, some five. I’ll leave you to move the decimals for yourselves.
In these instances I want to stand on a chair and say: Please hear me. Please open yourself to learning more about the legal process. It really does work, at least if you have a good lawyer. I have seen it year after year for the last 28 years. Hire me. Hire someone else good. But help yourself by letting a good lawyer make the world a better place for you, and people like you. I am trying to help. I am risking my time and money, putting my reputation on the line. I am ready to fight the good fight for you. I almost always win. My team and I have reviewed the facts and the law, and if we’re offering to represent you, then we know you have good claims, that you are deserving of our help, and deserving of the good results we’re confident of obtaining from a judge, jury, or arbitrator.
Profit is a healthy, all-American motive
Yes, of course I hope to make a profit, pay my mortgage, support my family, and save for retirement. I’m sure that’s why you work too. I’m not sure when the profit motive — and the efficiencies of having private attorneys police employment and consumer marketplaces to enforce laws against fraud, against failing to pay wages due, against the breaking of promises people relied on to plan their financial futures, etc. — became something other than quintessentially American, and good. But I know where that idea came from: Big business controls the public messaging. And big business does not want you to hire a lawyer, especially when it really did wrong you, and owes you money. So they say Plaintiff’s lawyers are greedy, for wanting to earn a profit. Like everybody else. I guess they think you shouldn’t buy their goods or services either then?
Big business’s own lawyers are in business for profit too, charging massive hourly rates. The only difference is they get paid every month, in cash. Lawyers representing ordinary people like you, who can’t pay big cash monthly like the companies do, have to work on contingency, get paid rarely, and risk not getting paid at all. Whose lawyers are greedier?
The best lawyers, people like me, don’t have to represent ordinary folks. We can get good hourly rates defending corporate clients against people like you. Or we can focus our efforts on disputes between businesses, which is where my practice started. I sometimes think I’ll do more of that. To the extent that consumers and employees don’t stand up for themselves by joining these big cases I bring for them, I can’t help them. It’s frustrating. But for now I still get up every day and feel glad for the chance to help people realize that they need to choose new paths to get to new places.
Employees who fear asserting their rights might be better served to fear missing out on the recoveries they’re entitled to
Several years ago I represented 1,400 graduates of the California School of Culinary Arts in Pasadena out of a group of 5,000. The school has led all of them to believe they could become chefs with 12 months of training and a three month unpaid internship. Despite contrary implications from the school, there were almost no admissions requirements, beyond an IQ of 70, and not much in the way of graduation requirements either. And no schooling takes the place if experience in a kitchen. So the truth was that graduates could expect only the $11 an hour entry level job they could get without spending $46,000 and 15 months of their lives. The fraud is worse than it sounds, because you can’t live on $11 an hour. So the student debt would compound, and become unpayable. And student debt isnot dischargeable in bankruptcy.
We took some initial cases, and after serious initial work showed they were winners, we emailed, we mailed, and we got substantial news coverage that let nearly all of the 5,000 know that we could help. Most of them did nothing.
The ones who engaged us together recovered $19.5 million in 2013 and 2014 — not a windfall, not even enough to get them out of debt, but enough to move them decisively in the right direction. Those with the best claims did well.
But we couldn’t help those who didn’t hire us. In the years since then, I’ve heard from numerous people seeking help. But it’s just too late. The statute of limitations has passed. No money is coming from the company who misled them into lifelong insolvency.
It’s hard seeing that if they’d responded when we were still able to accept these cases, we might have changed their lives. Now, there’s nothing I can do. It’s just too late.
We, our society, and our economy need healthy conflicts.
Healthy conflicts are an inevitable part of a healthy life and a healthy society. Good business people know it, and use the legal system to enforce the rules that make society (and markets) work. Promises and rules deserve enforcing. Markets need policing for economies to allocate resources, including your labor, efficiently.
Do as big businesses do, and not as they say: Hire great lawyers when you can, to make sure that you promises are enforced and rules are follows. If you’re worried about what will happen, don’t think you know the risks better than a well-vetted contingency lawyer who’s offering to represent you. Do your homework, and then hire someone good. Don’t let your own resistance or fear get the better of you. And don’t get confused about who’s side big business is on when they discourage lawsuits. They’re just telling you to let them keep what they took by breaking the rules.
You can learn more about our firm, and our cases, at https://gallo.law.