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US - Wage and hour settlements trending down, report says

November 20 2013

If the current pace persists, fewer wage and hour cases will settle in 2013, and for less total spending, than in 2012, according to the report, Trends in Wage and Hour Settlements: 2013 Update, released today by NERA Economic Consulting.

The report found 51 cases settled for approximately $215 million in the first three quarters in 2013. If this pace is maintained, authors of the report estimate that 68 wage and hour cases will have settled for a total of $286 million by the end of 2013. This compares to the 102 cases settled for $467 million in 2012.

Companies paid on average $4.5 million to resolve wage and hour cases in 2013, slightly lower than the $4.8 million average observed in 2012, and down from the overall average of $7.5 million for the 2007-2012 period, according to NERA. However, the 2013 median settlement increased to $2.8 million — the highest observed in any year since 2008 -- driven by an increase in the proportion of settlements over $5 million in 2013 compared to the previous year.

For cases in the first three quarters of 2013, 45 percent of allegations were related to an overtime violation, in line with previous years. Fifteen percent of allegations involved misclassification, down slightly from 2012, while the proportion of involving an off-the-clock violation increased slightly. More than half the cases observed in NERA’s wage and hour database involve multiple allegations. With cases involving a misclassification allegation, over 85 percent also asserted an overtime allegation.

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