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Count the cost before waging the war

When Sun Tzu wrote The Art of War in the sixth century B.C., he probably wasn’t thinking about how his advice would apply to employment law litigation in the 21st century, but he might as well have. One of his most famous quotes from that epic military treatise is, “Those who wish to fight must first count the cost.” A recent example from Washington state shows the value of following this sage advice.

Andrew Fiore worked for a company called PPG Industries for a relatively brief period of time – approximately nine months – in 2009. He was employed as a territory manager, a position that called for him to service retail stores in his territory throughout Washington and Oregon; he assisted sales of paint and paint products for PPG.

Fiore’s actual job involved managing color samples at the paint counter of these retail stores. He rotated stock, built displays and performed manual labor. His job also called for him to directly interact with the customers and contractors looking to buy the products.

PPG considered Fiore an “exempt” employee, which means it paid him a flat annual salary and did not pay him any overtime. In PPG’s view, Fiore’s primary job responsibility was “promoting sales,” which meant that he fit into one of the white-collar exemptions that let it pay him a fixed salary no matter how many hours he worked per week.

According to Fiore, he worked a considerable number of hours beyond 40 per week during his brief stint at PPG. He traveled to and from the 11 stores in his territory, handled after-hours emails and phone calls, and other functions besides his in-store job responsibilities.

After his employment at PPG ended, Fiore brought a wage and hour lawsuit against the company, contending that his duties principally consisted of manual labor and conducting individual sales; thus, he should have been entitled to overtime pay. After calculating how much he thought he should have been paid, Fiore concluded that he had been shorted about $12,000.

Now, $12,000 is nothing to sneeze at. It is a considerable sum of money to the vast majority of people in this country, and someone who believed he earned that money fairly would certainly not want to give it up. However, $12,000 also is no small chunk of change to many employers, even an international conglomerate.

PPG decided after it received the lawsuit that it was willing to fight Fiore’s efforts to recoup that money. It instructed its lawyers to defend the case vigorously, and they did just that. For the next three years, the lawyers for PPG and Fiore waged a battle over this issue at arbitration, then at trial court, then at the Court of Appeals, and finally at the Washington Supreme Court.

When the dust settled a few weeks ago after years of fighting, the courts concluded that Fiore was entitled to recover his $12,000 (now doubled to $24,000 as a punishment for “willfully” withholding the overtime pay). And to cap it all off, the court also told PPG that it had to reimburse Fiore’s attorneys their fees for fighting the case on his behalf, which totaled more than $700,000. Yes, that’s right: nearly three-quarters of a million dollars spent fighting over $12,000.

This is not necessarily an uncommon scenario. For a variety of reasons, employers often far outspend in defense what it would have taken to settle a case early on. In PPG’s view, this matter was a “test case” that would have national implications for many of its workers, which was one reason to go toe-to-toe all the way to the Supreme Court.

In many other cases, employers decide to draw a line in the sand and fight a particular case to set an example for other disgruntled workers (or former workers) who may be thinking about filing suit but will think twice if they know the company will fight forcefully.

In still other cases, employers decide to fight a case on principle – they know they are in the right, and they would rather spend money defending their position than “paying off” someone undeserving of any reward.

All of these reasons are quite justified, and at the end of day PPG might say that it would do it all over again if given the choice. However, for some employers, another quote from Sun Tzu’s Art of War might be applicable when thinking about fighting employment litigation: “He will win who knows when to fight and when not to fight.”

For some companies, spending $700,000 to fight a $12,000 claim is worth the money. For many others, this story is a cautionary tale about when to fight and when to think about resolving a case in a different manner.

Rich Meneghello, managing partner of the Portland office of Fisher & Phillips LLP, is dedicated to representing the interests of management. Contact him at 503-205-8044 or rmeneghello@laborlawyers.com, or follow him on Twitter – @pdxlaborlawyer.

About Rich Meneghello

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