Projections for this year show that class actions filed over Federal Labor Standards Act (FLSA) violations could very well set a new record in 2016, marking an unprecedented, all-time high for the number of lawsuits filed. It’s no secret that wage and hour cases have been the most common type of employment claim lodged in the past several years, with each year (since 2000 at least) bringing us more cases than the year that came before it. In 2014, 8,066 wage and hour cases were brought to federal court and, in 2015, a staggering 8,954. But, what does a wage and hour case look like? I’m glad you asked.
First, we need to take a look at what actually constitutes a violation of the FLSA. Though less frequent, some employers can get in trouble for failing to adapt new minimum wage increases, causing them to underpay their workers.
But, more commonly, they’re brought to court for things like:
- Misclassifying workers as independent contractors or “managers”
- Miscalculating a worker’s overtime rate by failing to take into account all wages earned (like bonuses)
- Failing to pay for certain work tasks, such as booting up computers; changing into uniforms; participating in security checks, meetings and training; and working at home
- Paying “half-time” or “Chinese overtime”
- Not paying workers for meal breaks they work through or time spent driving between job sites
- Failure to pay overtime – at all
Essentially, anything an employer could do to not pay its workers everything they are owed could be considered a violation of the FLSA. Whether employers do these things unknowingly or consciously, they are coming under increased scrutiny by both the government and the law. So, why, exactly, have these types of cases been on the rise – a trend that’s expected to continue? I’m glad you asked that too.
Federal Involvement Fuels the Fire
Government entities have played their part not only in shining the spotlight on employers who circumvent federal and state laws, but also ensuring workers are paid exactly what they’re owed. A new rule proposed by the Department of Labor (DOL), expected to be finalized this year, would extend overtime eligibility to millions of workers and, in turn, greatly increase the amount of liability companies could face. This new rule could also increase the number of plaintiffs looking to file suits for overtime wages if employers don’t keep up with new regulations.
The DOL’s proposal focuses on the salary threshold full-time workers would need to hit before they’re considered exempt from FLSA overtime standards (translation: not owed overtime). Currently, the threshold is $23,660. With the proposed changes, this number would increase to $50,440. (The threshold would also automatically adjust in order to keep up with inflation, preventing the range of workers affected by the rule from changing with the years.)
Such a jump in the salary threshold would allow a significant number of workers to qualify for overtime where they previously didn’t. An influx of workers expecting overtime pay – and if history tells us anything about employers understanding and complying with wage and hour regulations – would increase the number of lawsuits tremendously.
Success in the Courtroom
Outside of federal intervention, the number of wage and hour class actions could – and is – increasing simply because of the amount of success attorneys have been finding handling these types of cases. Wage and hour classes are relatively easy to certify in court. All potential class members share the same workplace, so it isn’t difficult to identify those who were affected. They share similar, if not identical, claims against their employers, making it less likely for the class to be dismissed on the grounds that the damages aren’t uniform across the group.
The numbers also show what appears to be increasing support from the courts when it comes to certifying FLSA cases. Conditional certification was granted in 75 percent of cases last year and 64 percent avoided being decertified altogether. Yet, a large part of that could still be attributed to plaintiffs’ attorneys. FLSA cases have been steadily increasing over the past several years, so it shouldn’t be surprising that lawyers have learned what strategies will and won’t work in the courtroom. On top of that, the settlements resolving these cases have been notably high. The top settlements last year were worth almost $2.5 billion.
But, these types of cases aren’t only about how big attorneys can get their paychecks. FLSA class actions remind companies that they have to meet a certain standard when it comes to how they compensate their employees. If these low-risk, high-reward wage and hour cases continue to propagate healthy wage standards among employers, then 2016 could be a year of great change for workers across the country.