CWS 3.0: May 22, 2013

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Federal Wage and Hour Lawsuits Up 10%

Employment law firm Seyfarth Shaw LLP reported that federal wage and hour lawsuits filed under the Fair Labor Standards Act reached a new high for the 12 months ended March 30.

The firm reported 7,764 Fair Labor Standards Act cases were filed, up 10 percent from the preceding 12-month period. It cited data obtained from the Federal Judicial Center.

The bulk of the lawsuits include misclassification of employees, alleged uncompensated work performed off the clock and miscalculation of overtime pay for nonexempt employees, according to Richard Alfred, chair of Seyfarth’s wage & hour practice.

“With no clear catalyst during the past 12 months, this strong spike and new high for FLSA claims makes them one of the top threats to U.S. employers,” Alfred said in a press release.

Staffing buyers and staffing firms have been the subject of numerous such lawsuits. In one example, a staffing firm was ordered to pay $1.9 million in back wages.

In addition, a cable television installer, Bowlin Group LLC, was required to pay almost $1.1 million in back wages and damages for misclassifying 196 employees as independent contractors, the U.S. Department of Labor announced recently.

Alfred cites several factors which may be responsible for the increase in such suits:

  • Improving economy may provide incentive for plaintiffs’ counsel to sue new and relatively unsophisticated companies whose workforces are growing.
  • The economic recovery has seen an increase in employment demands on all workers, which may cause them to question their pay packages.
  • More lawyers may now be filing lawsuits perhaps motivated by large settlements in past cases.
  • Employees are more sensitized to wage and hour issues, at least in part as a result of their access to social media.

Wage and hour class action lawsuits are the biggest source of class litigation in the nation, says Eric Rumbaugh, attorney and partner with Michael Best and Freidrich LLC. Companies find themselves in trouble in several common ways: One, by asking their staffing firms to classify their contingents as exempt in order to avoid paying overtime. The second stems from technical mistakes, misunderstanding a state law or other technical issues.

Exempt status is based on the job description, so be sure to review each requisition carefully. Once the contingent worker is in place, make sure the work he or she is actually doing matches what’s in the description, if exempt status seems to be appropriate. Further, work with legal counsel to understand the technicalities. It is a good idea to audit your contingent worker compliance requirements state-by-state, Rumbaugh advises, reviewing worker job descriptions carefully so you don’t make careless errors.

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