Wage and Hour Awards Skyrocketed in 2016

Published February 09, 2017
By Anonymous

Class action lawsuits against employers for alleged violations of minimum wage, overtime, and other wage and hour protections decreased slightly in 2016. But they remain on track for long-term growth under a more business-friendly Trump administration, according to a new report.

Wage and hour class action filings were down in 2016, but settlement values were up.

That said, Supreme Court nominee Neil Gorsuch has sided with businesses on past labor issues and could provide the deciding vote in an upcoming high court review that could curb workers’ ability to file class action lawsuits.

If your employer violated wage and hour laws, you may be eligible for a lawsuit. Learn more during a free case review from ClassAction.com.

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Wage and Hour Lawsuits Soared in Value

Corporate defense firm Seyfarth Shaw issues an annual report on workplace class action litigation that covers employment lawsuit trends from the previous year and offers analysis of what to expect in the year ahead.

More than 70% of all employers violate federal wage and hour laws.

Wage and hour lawsuit filings have increased by more than 450% over the last 15 years, reports Seyfarth Shaw, which notes that these lawsuits cause the most concern for employers. That's because more than 70% of all employers violate federal wage and hour laws, according to the Department of Labor (DOL). Such cases also tend to be high stakes lawsuits from an employer’s perspective, since many result in large settlements.

Key wage and hour litigation insights from the 2017 report include:

  • One hundred and ninety-five wage and hour class actions were allowed to proceed in 2016, compared to 175 certifications in 2015. Wage and hour cases were certified at a higher rate than any other employment class action type in 2016.
  • Although the number of wage and hour cases filed in 2016 decreased for the first time in more than a decade, the value of the top ten wage and hour lawsuits increased significantly, to $695.5 million—nearly quadrupling in value compared to 2014.
  • The top two wage and hour settlements of 2016—both involving FedEx—were valued at $240 million and $226 million. Both cases settled claims that FedEx employees had been misclassified as independent contractors.
  • Wage and hour litigation is expected to continue its overall growth in 2017 and beyond based on new federal overtime regulations, local minimum wage laws, independent contractor misclassification lawsuits, and increased public awareness of employees’ rights.

How Trump Could Impact Wage and Hour Cases

Not all wage and hour disputes are taken up as class action lawsuits. Through the Department of Labor, the federal government also files lawsuits against employers that violate wage and hour laws and obtains settlements on workers’ behalf.

DOL enforcement lawsuits are typically pursued far more aggressively under Democratic administrations than under Republican administrations. The DOL aggressively sued employers for wage and hour violations during the Obama years. Since 2009, the DOL’s Wage and Hour Division closed 200,000 cases and recovered more than $1.8 billion in back pay for more than two million workers.

Sixty percent of CKE restaurants investigated by the DOL were caught violating labor laws.

While the scope of labor enforcement policies in the Trump administration remains to be seen, if the new Administration’s Department of Labor does back off wage and hour enforcement, plaintiffs’ attorneys would likely pick up the slack by filing more private wage and hour employment lawsuits.

Critics of Mr. Trump’s pick for labor secretary, CKE Restaurant Holdings Inc. CEO Andy Puzder, claim CKE chains such as Carl’s Jr. and Hardees are some of the nation’s worst labor law violators.

A fast food worker advocacy group called Fight for $15 says that 60% of CKE restaurants investigated by the DOL since 2009 were caught violating labor laws.

Neil Gorsuch Could Curb "Frivolous" Lawsuits

Perhaps the biggest wage and hour wildcard of the Trump Administration is how his Supreme Court Justice will shape labor law outcomes. Of particular importance to wage and hour cases is an upcoming review that will decide whether employers can use arbitration agreements that prohibit workers from filing class action lawsuits.

Mr. Trump has nominated conservative justice Neil Gorsuch to fill the void left by the late Antonin Scalia. As a federal appeals court judge, Mr. Gorsuch opined against what he perceived as government agency overreach. In his private legal career, Mr. Gorsuch supported curbs on what he deemed “frivolous” class action lawsuits.

The court is expected to hear the class action waiver case in the 2017 term, which begins in October. Judge Gorsuch should sit on the bench by then, barring a refusal by Senate Democrats to confirm him.

Gerald Maatman, lead author of the Seyfarth Shaw report, told The Chicago Tribune, “I think employers have a supporter with [Mr. Gorsuch], who is unwilling to go along with agencies just because they interpret the law in a certain way.”

"If you think that workers need more protection, then he's probably not your guy.”

Richard Trumka, President of The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), also sees an employer ally in Gorsuch.

“He’s been a very, very strong advocate for corporations at the expense of working people,” said Mr. Trumka. “If you think that workers need more protection and corporations need less protection, then he’s probably not your guy.”