Why this company is out $5M over a missing Oxford comma

CFOs everywhere will likely want to double- or triple-check their job descriptions and classifications after hearing this company’s unfortunate story.

Oakhurst Dairy recently made national news when it settled an FLSA lawsuit with its delivery drivers to the tune of $5 million. While a multimillion dollar settlement is hardly a rarity these days, the details of this suit will likely be eye-opening for employers of all stripes.

Without a comma, it could mean …

The crux of this lawsuit centered around a state law where employees were exempt from overtime payments if they were responsible for the “canning, processing, preserving, freezing, drying, marketing, storing, packing for shipment or distribution of: 1. agricultural produce; 2. meat and fish products; and 3. perishable foods.”

We put the “or” between “shipment” and “distribution” in bold because that’s the spot in the seemingly straightforward exemption that caused the company all of its problems.

Without an Oxford comma between “shipment” and “or,” the exemption could be read in two different wayd, either:

• packing and distribution were a single task, or
• two distinct ones.

In the lawsuit, the drivers argued that they were a single act and, because they did no packing, they didn’t actually fall under the overtime exemption.

For its part, Oakhurst Dairy claims it was perfectly justified in denying overtime under the exemption. Problem is, it feels a court battle would be too time-consuming and expensive, so it’s settling — for $5 million.

That’s a hefty price to pay for something only grammar purists truly care about, the Oxford comma.

When state trumps federal law

If this case sounds familiar, it’s because we covered it last year. Initially, the company was slated to owe $10 million in unpaid overtime, but it looks like that amount has been halved by this settlement.

While this is very specific (and strange), it does offer some key takeaways for Finance pros.

Remember: More stringent state laws — as well as regs like the Motor Carrier Act — can preempt federal laws like the Fair Labor Standards Act. Not only do you have to be aware of situations where your state’s law is the rule of the land, you need to be well-versed — or have an HR department or legal counsel who is well-versed — in the finer points of those laws, with an emphasis on any circumstances that could negate an exemption that you’re claiming.

Circumstances like, say, a missing Oxford comma.