Malakhov v. CMGRP: Off-the-Clock Settlement Underscores Importance of Informal Workplace Rules

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Public relations company Rogers & Cowan has resolved a class action lawsuit filed by employees alleging that they were compelled to work off-the-clock without pay, in a settlement that is likely to influence other classwide off-the-clock litigation. See Malakhov v. CMGRP, Inc., No. 11-06605 (C.D. Cal. Oct. 22, 2012) (MPA ISO Conditional Certification & Preliminary Approval).

As set forth in the recently filed preliminary approval papers, the plaintiffs allege that “junior employees, who wanted to move up and create a career from themselves in the Defendant companies, had to put in a lot of ‘volunteer’ hours if they wished to succeed.” MPA at 6.

The settlement covers 169 employees, and although relatively modest in its total value (just $327,500), the Malakhov settlement embodies several encouraging signs for off-the-clock class actions. First, the allegations of off-the-clock work were premised entirely on unofficial and unwritten company “policies.” Specifically, the plaintiffs claim that the defendant’s prevailing workplace culture sent the unmistakable message to employees that only by performing off-the-clock work could they advance.

Additionally, Malakhov is notable for settling without class certification having been granted. As such, the settlement will function as a benchmark for both pre- and post-certification settlement of off-the-clock claims, with the settling class members in Malakhov in line to receive an average of approximately $1,000 per class member in back pay for their off-the-clock work.

The approval papers simultaneously seek conditional certification and settlement approval as to a federal Fair Labor Standards Act collective class, as well as a California-based class seeking approval and certification under Federal Rule 23.