No End In Sight
Posted on 01-Mar-10 by The Timekeeper
Law firm Seyfarth Shaw has released their sixth annual Workplace Class Action Litigation Report, showing a 44% increase in wage and hour settlements in 2009 versus 2008. They say it’s a national trend that’s likely to continue at least through 2010.
In what might be even worse news for employers, they say both the number of cases filed and the potential financial exposure have “increased exponentially” since they started publishing the report six years ago.
Trends
Federal class-action suits are especially prevalent in Calfornia, New York and Florida. There’s also significant state-level action in those states plus Illinois, New Jersey, Massachusetts (which recently passed a mandatory treble damages law), Minnesota, Pennsylvania and Washington. Another big trend for cases where the employer has locations in multiple states is to combine several state-level actions into a single federal class-action.
Something else to watch out for is if one of your competitors gets hit with a suit. Plaintiffs’ lawyers have figured out that businesses in the same industry often have the same employment and payroll practices, so once they’ve identified one defendent, they’re likely going to take a close look at others in the same industry.
According to some labor-law attorneys, there’s a notable increase in cases centering around employee breaks, particularly in the health care business, as well as suits targeting industries such as meatpacking and traditionally low-wage businesses such as grocery stores and restaurants.
Easy Class-Action Cerfitication
According to attorney Gerald Maatman, who oversaw the Seyfarth Shaw report, wage and hour lawsuits are especially attractive to plaintiffs’ attorneys because it’s easier to get such cases certified as class-action suits than other areas of employment law, “and the amount of money at issue is immense.”
Show Them The Money
What makes the trend even worse is the current economic climate. Lots of companies have been forced to downsize. For the those who still have a job, there might be some reluctance to file a suit for fear of “upsetting the apple cart,” but once an employee has been let go, they’re much more likely to seek compensation if they feel they were underpaid before the layoff — especially if they’re in a situation where their unemployment may be running out.
Beyond that, downsizing has resulted in many employees taking on additional duties, which might very well have changed their classification. Formerly exempt administrative or managerial employees, for instance, might have taken on additional clerical or other non-managerial work, jeopardizing their exempt status. Remember, it’s not what an employee’s title is, but what their job duties actually are, that determines their exempt status.
(And, to be fair, there may be some formerly overtime-eligible employees who are now performing more managerial or exempt administrative level work who could now be reclassified as exempt.)
For Best Results, Be Proactive
As a result, most employer-side labor law attorneys are advising their clients to do a wage and hour audit sooner rather than later, to make sure they’re still in compliance with the law given any changes in their workforce. It’s almost certainly better (and, ultimately, cheaper) to figure these things out early on and make the necessary corrections up front.
So, how about you? Are you worried about this trend toward more litigation? What actions have you taken to protect your business?
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