• For an economist, this is a pretty bad analysis!

    Take two employees:

    1) Rich Ralph, who has a base pay of $30/hour, violations for the full statutory period, and an accumulated case value of $60,000.

    2) Poor Paul has a base pay of $7/hour, violations for 6 months, and an accumulated case value of $3,500.

    Those cases will take roughly the same time and effort to try and win–let’s say it is $15,000.

    So unless you are willing to pay the needed amount for a trial (call it $15,000) then Poor Paul will never, ever, find anyone to represent him. He’s screwed–perhaps even more than Ralph, since the value to Paul of $3500 may exceed the value to Rich Ralph of $60,000

    Now, sure: The employer ends up paying a ton of attorneys fees. But they don’t need to.

    The ER can avoid those costs by
    1) paying Paul correctly in the first place (which is cheapest, and best). The statute is pretty clear. And you can ALWAYS pay “hourly with OT” if you are unsure; that is a default safety net of legality.

    2) paying paul immediately on demand (second cheapest, second best). By and large most state and federal employment agencies will settle for only a bit more than single damages plus a promise to stop in the future. That includes the Mass. attorney general, which is one of the stricter ones.

    3) Promptly filing a rule 68 offer when served (third cheapest, third best). You’ll get dinged for attorneys fees, but not many.

    If the employer makes the choice to take the gamble, run up the bill, and go go trial, how on earth can you blame the statute?

    • There are two facts you are missing.

      1. This is a settlement, not a court judgement after trial.
      2. The employer claims that the suit is frivolous but it has become too expensive to continue to defend against it.

      I think you are being extremely biased/unfair in simply assuming that the employees claims are true.

      There are problems with your 2 and 3. Paying on frivolous claims invites more such claims. That too has a cost. A cost that can far exceed the cost of defending a meritorious claim.