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Civil: Putative Class Members Must Comply With Wage Claims Act Procedures
Posted in Litigation

On Monday, the Indiana Court of Appeals addressed whether the act of seeking class certification enables putative class members to avoid compliance with the Wage Claims Act’s requirement that individuals first submit their claims to the Department of Labor.  The court held that it does not.

In Lemon v. Wishard Health Services, the class representative alleged that, like her, over 200 individuals were wronged by Wishard Health Services when Wishard failed to timely pay accumulated sick pay and paid time off following Wishard’s termination of their employment.  

The court found that the Wage Claims Act, Indiana Code section 22-2-9-2(a), applies to claims made by employees involuntarily separated from their employment.  Claimants under the Wage Claims Act, as distinguished from those under the Wage Payment Act (which applies to those who have voluntarily left their employer), must first submit their claim to the Department of Labor “for administrative enforcement,” before bringing a claim in a trial court.  This process provides for an individualized review of the submitted claims. 

Lemon alleged that all members of the putative class were involuntarily terminated by Wishard, but it was undisputed that only Lemon, the class representative, had submitted a claim to the Department of Labor before filing a complaint with the trial court.  Further, Lemon’s claim to the Department of Labor made no reference to any wage claim violations at Wishard other than her own.  “We are not persuaded,” the court wrote, “that permitting one individual’s claim to serve as a stand-in for hundreds of others is an adequate substitute for this individual review provided for by [the Wage Claims Act].” 

In reaching that conclusion, the court distinguished a prior Indiana Supreme Court case, Budden v. Bd. of Sch. Comm’rs, 698 N.E.2d 1157 (Ind. 1998), and the application of Indiana’s Tort Claims Act.  The court explained that, whereas the purpose of the Tort Claims Act is to provide notice of claims and not to create barriers to court to raise those claims, the opposite is true of the Wage Claims Act, which, by express provision, “is to create a barrier to claims to be filed in court.”

Further, the court found that a putative class cannot circumvent the express requirements of the Wage Claims Act by obtaining letters of referral from the Department of Labor after the lawsuit was filed.  “[T]o get the letter of referral after the fact,” the court concluded, “would be to render the statute a nullity, which we cannot and will not do.”  Similarly, the court found that, for many of the putative class members, the two-year statute of limitations for a Wage Claims action had expired and, given those individuals had not met the procedural prerequisites, that period was not tolled.

Finally, by identifying the potential ramifications of such an error, the court also offered an appellate practice tip in a footnote, reminding practitioners of the importance of not raising new arguments or relying on information not in the record when on appeal.



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