As wage and hour litigation has grown more complex, the role that the data expert plays in how parties investigate allegations, value risk, and present their positions at mediation or during trial has become increasingly important. Our team at Libra Analytics operates in this wage and hour compliance space, providing independent data expert services during all stages of litigation, including class actions and PAGA claims. This article addresses how data experts can contribute at each stage of a wage and hour case, the types of analyses we do, and why the contributions of a data expert can shape both liability and damages outcomes.
What Is A Wage And Hour Case?
Wage and hour cases arise out of legal claims when an employer is accused of violating labor laws that are governed by the Fair Labor Standards Act (FLSA) at the federal level and by state wage and hour laws, which can provide even stronger employee protections (for example, in California or Washington). In addition, many cities and counties now pass their own worker-protection laws in terms of minimum wage, local scheduling rules, paid sick leave or other wage and hour laws. Wage and hour lawsuits are typically filed as class actions, where a single or a handful of plaintiffs sue their employer on behalf of all similarly situated employees. Here in California, wage and hour cases are also often filed as representative actions under the Private Attorney General's Act (PAGA).
Common wage and hour claims include unpaid minimum wages or overtime (often due to rounding or off-the-clock work), failure to provide compliant meal and rest periods, miscalculation of the regular rate of pay, employee misclassification (as independent contractors or exempt instead of non-exempt employees), and unreimbursed business expenses. However, numerous additional wage and hour claims exist under the various federal, state and local labor laws, some of which are classified by the U.S. Department of Labor Wage and Hour Division.
Why Data Analysis in Wage and Hour Cases is Important
Wage and hour disputes are fundamentally quantitative. To move beyond anecdotal evidence, the parties involved need to understand patterns in the company's records across many employees and many pay periods. That work is almost always driven by the available data.
Without data analysis, wage and hour disputes often devolve into subjective, conflicting accounts rather than objective, evidence-based evaluations. By their very nature, wage and hour claims are usually pattern-based issues. Liability determinations are typically difficult, if not impossible, without analytical support to prove or disprove systemic violations. Additionally, if there is liability, the data expert can quantify the damages accurately. In general, judges and juries find objective numerical evidence very compelling.
At Libra Analytics, we sometimes get calls from parties in wage and hour disputes after an unsuccessful mediation, where either one or both parties failed to support their case with solid data analysis. In these cases, the parties often can’t even agree on the basic facts, such as the number of employees or number of workweeks at issue. And if only one of the parties has a data expert, typically that side ends up controlling the conversation, whether at mediation or at trial.
Core Responsibilities Of The Data Expert
Each case is unique, and the scope of the work is tailored to the individual requirements dictated by the specific claims, the data available, the timeline, the litigation stage and other factors. However, there are some common tasks that typically repeat across cases, even if the details differ:
- The first step in the process is usually understanding the available data. The expert will typically communicate with the client to determine how information is stored in each system, including how the fields are defined. The data specialist can help determine what data should be generated and what the preferred format is. In some cases, data collection may include sampling, data entry or other collection methods.
- A common step following data collection is cleaning and organizing the raw data into an analytical database. Even data from modern timekeeping and payroll systems isn’t perfect, and identifying and addressing data issues is a key, often overlooked part of the process. And when the data sources include messy data (PDF reports, handwritten documents, unclear data values, etc.), the data cleaning step becomes even more important. Without data experts who can reliably address data issues and prepare the data for analysis, the output is likely to be unreliable and often misleading.
- The third typical step in the process is the data analysis itself. This step involves writing and running computer programs to analyze the particular claims of the case, such as analyzing meal break compliance, rounding outcomes, the calculation of the regular rate of pay, and so on. For most cases, this step also includes building an exposure model, which calculates potential economic damages under various scenarios.
- Finally, the data expert prepares output materials to present the results of the analyses. Common output materials include presentations, exposure models and complete written expert reports. The presentation of the results in a powerful, easy to understand manner is of key significance, since the target audience is usually not an expert in statistics or data analysis. A good data expert has the skill to translate complex analytical methods into understandable insights that provide valuable input for decision makers.
At Which Stage of Litigation is a Data Expert Best Involved?
The timing of the data expert’s involvement varies case-by-case, largely dependent on the legal circumstances of the particular case, as well as numerous practical considerations. In many class actions, counsel retains a data expert soon after the initial case assessment (sometimes even before a complaint is filed), because their early involvement helps identify the relevant data systems involved in discovery.
In class and representative actions, however, data experts often only begin to play a prominent role in preparation for mediation or at the class certification stage. They may use statistical analysis to understand whether the employer’s records can be used to evaluate alleged violations on a class wide basis, or whether the experiences differ materially across putative class members. The same data expert may then extend the analysis to calculate potential damages under different legal theories if certification is granted.
For employers, it often makes sense to engage a data expert even if there is no active litigation. This typically takes shape in a wage and hour audit, during which the expert performs a comprehensive compliance review of the timekeeping, payroll, and HR records. The audit can identify wage and hour issues and make corrections before they become legal problems. Even if the employer gets sued, having performed a proactive audit and making corrections can significantly reduce liability. In California, the 2024 PAGA reform explicitly limits penalties for employers who conduct thorough PAGA audits, document “reasonable steps” toward compliance, and promptly correct issues.