Spike in Wage and Hour Lawsuit as Employment Lags

A spike is being seen in wage and hour lawsuits as employment continues to lag. In fact, wage and hour lawsuits are at a two-decade high, with unemployment steady at over eight percent, said Bloomberg Businessweek.

In the 12-month period ending March 31, 7,064 federal wage-and-hour cases were filed, with the number of filings steadily increasing each year for the past 12 years, said Businessweek. In 2000, the total was 1,854, said the Administrative Office of the U.S. Courts. The Office intends on publicly releasing the data later in the year.

An attorney representing companies in lawsuits brought by workers said that the economic downturn and unemployment have contributed to the rise, said Businessweek. “When employees are laid off, that may be an opportunity for them to seek legal counsel either to see if there’s any basis for contesting their termination or to make sure that what they’re receiving in severance or other benefits is proper,” the attorney told Businessweek in a telephone interview.

An attorney representing employees told Businessweek that high unemployment provides companies with the leverage to compel staff to work off the clock because people are concerned about job loss. This fear changes once they are fired. “As unemployment goes up, people get laid off and they’re no longer worried about retaliation,” the attorney said in his telephone interview with Businessweek. Terminated employees might look into such lawsuits. “I don’t suggest these cases are brought in such a cavalier way, but they’re complicated,” he said.

Attorneys also point out that vagueness in the Fair Labor Standards Act (FLSA)—the Act sets standards for overtime pay—is a contributor to the rise in cases. The FLSA explained Businessweek, was enacted in 1938, amended in 2004, and defines which workers are entitled to extra pay for working in excess of a 40-hour workweek. The law is considered outdated, which creates challenges when applying its mandates, which were developed in a different timeframe and under different work settings than what is seen in today’s higher paced and more technologically savvy workplace.

As we’ve explained, the FLSA requires that most employees in the U.S. be paid at least the federal minimum wage for all hours worked, as well as overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek. According to the Labor Department, in fiscal year 2008, more than 197,000 employees received a total of $140.2 million in minimum wage and overtime back wages because of FLSA violations. The majority of these violations involved unpaid overtime. If an employer violates the FLSA, a plaintiff employee is entitled to statutory damages, which include past wages, attorney fees, and liquidated damages.

One attorney noted that growth can sometimes lead to violations because firms are ill prepared to handle employee classifications issues. Amdocs Inc., a software firm, was sued by its information technology workers for overtime pay in September 2010 over how the workers were classified and paid, according to the December 2011 court order certifying the case as a class action, which. According to the court filing, Amdocs argued because the workers fell within the might include more than 700 people, said Amdocs, wrote Businessweek.

Wells Fargo & Co. saw similar cases last year with its home-mortgage consultant staff, which received commissions, but no overtime and involved employee classification. The two classes were certified this month, said Businessweek. According to a court filing, Wells Fargo said it changed its classification system.