The number of new wage-and-hour suits in federal courts hit an all-time high last year, up about 8 percent over the previous year, a rise attorneys say stems from overtime and minimum wage policy debates around the country increasing worker awareness and the difficulty of applying New Deal-era employment law to the modern workplace.
On Friday, management-side firm Seyfarth Shaw LLP released data — obtained from the Federal Judicial Center — that shows 8,781 federal wage-and-hour suits were filed in the federal government’s fiscal year ending Sept. 30, 2015, a 7.6 percent increase from 8,160 the previous year. The numbers include federal Fair Labor Standards Act suits filed in federal courts and analogous state-law suits removed to federal court.
“In federal court, employers are more likely to face wage-and-hour claims than any other form of employment litigation,” said Richard Alfred, Seyfarth’s national wage-and-hour litigation practice group chair.
Although there have been some year-to-year drops, such as the 8 percent fall between 2012 and 2013, overall the trend-line shows wage-and-hour claims have been steadily rising for 15 years, Alfred said. Wage-and-hour filings have skyrocketed by 450 percent from 2000, when 1,935 filings occurred, according to Seyfarth.
One catalyst for the increase is an emphasis in the public sphere on issues such as overtime pay and minimum wage, which fall under the purview of the FLSA, Alfred said.
Across the U.S., there have been movements in 2015, some successful, toward increasing the minimum wage at local and state levels, such as Seattle’s hike to $15 per hour and the September order from New York Gov. Andrew Cuomo’s administration increasing the minimum wage for fast-food workers to $15 per hour, which are both designed to achieve that dollar value on a progressive, multiyear scale.
In his State of the Union address in February, President Barack Obama called for an increase in the federal minimum wage to $10.10, and presidential candidates in both the Democratic and Republican parties have spoken a lot about the issue.
The U.S. Department of Labor in June proposed a rule overhauling the overtime exemptions to increase the salary threshold — and therefore expand the eligibility for overtime pay for certain employees while also potentially adopting a new duties test for eligibility.
There are also policy and legal debates over who is an employee and who is an independent contractor in a variety of fields, especially in so-called new economy work in which the employer relies on a Web-based or app-based platform like ride service Uber, which is at the center of class action litigation over the classification issue.
Alfred said minimum wage in particular is the kind of high-profile debate that can kick off an interest in litigation.
“People understand it quickly and have views about it,” he said.
Employers might not necessarily be doing more to attract lawsuits, such as erroneously classifying certain workers as independent contractors or as exempted from overtime compensation, it’s just that workers are now more enlightened about what’s going on in their workplaces, according to plaintiffs attorney Michael Litrownik of Outten & Golden.
“Workers are more willing to challenge employment practices they see as wrong or illegal or unfair,” he said. “They’re reaching out more to plaintiffs attorneys and are more interested in challenging those practices either individually or as part of a class or collective.”
Another reason for the rise is that the workplace every year is beginning to resemble less and less the factory floor that predominated in 1938, when the FLSA became law, according to Alfred.
“Trying to fit a law designed at a very different time to address different problems and a different type of economy and workplace is difficult, and raises issues,” Alfred said.
The issue of whether a worker is an independent contractor or an employee — which has gotten a lot of airtime by way of DOL wage-and-hour administrator David Weil’s announcement that most workers are employees under the FLSA — pops up extensively in the context of the changing workplace.
This is especially true with state-level policy orders and federal suits over the classification of Uber drivers, but Alfred said it implicates a variety of businesses in the so-called new economy.
But aside from app-based companies, technology has also changed the definition of the workplace itself, according to management-side attorney John M. McKelway Jr. of McCarter & English LLP. He said it brings up “off-the-clock” questions about what sort of duties are compensable, such as using a BlackBerry to read and send emails or even using one’s own computer at home to carry out certain tasks.
“With telecommuting it is hard to measure when a workday begins and ends,” McKelway said.
He says that in the trenches he is seeing a rise in off-the-clock claims under the FLSA, which, once an employer’s liability is established, can yield significant damages for employees.
Determining what even constitutes “work” in this new workplace also provides a steady stream of suits because the FLSA never actually defined what work is and subsequent regulations haven’t helped, Alfred said. Although the U.S. Supreme Court has weighed in on the issue a few times, there has never been a universal definition codified, he said.
“We see the issue continue to be litigated today,” he said.