Wage and Hour Lawsuits on a rise

For the past several years wage and hour lawsuits have become extremely prevalent. Cases under FLSA have made a hefty jump from 7,882 in 2013 to 8,066 by the end of last year. Additionally, while on one hand there has been an increase in wage and hour lawsuits, there has been a decrease in settlements on the other. The general decrease in settlement was in trend after the Supreme Court of the United States laid down its landmark judgment in Wal-Mart Stores Inc. vs. Dukes 131 S. Ct. 2541 (2011). In this case, the employer operated retail stores and was the nation’s largest private employer. The employees alleged that the employer was liable for disparate impact and disparate treatment under 42 U.S.C.S. § 2000e-2 because it gave local managers discretion over pay and promotions, which the employees claimed, was exercised disproportionately in favor of men. The Supreme Court held that the employees’ class could not be certified because the action did not satisfy the commonality requirement of Fed. R. Civ. P. 23(a)(2). The employees failed to offer significant proof that the employer operated under a general policy of discrimination. An expert who testified that the employer had a strong corporate culture that made it vulnerable to gender bias, did not determine how often stereotypes played a meaningful role in employment decisions. The employees’ statistical and anecdotal evidence did not show that a common mode of exercising managerial discretion pervaded the entire company. In addition, the employees’ backpay claims were improperly certified under Rule 23(b) (2), which did not allow certification of monetary relief claims that were not incidental to injunctive or declaratory relief. Regulatory agencies such as EEOC & DOL kept up aggressive litigation last year, but also saw a fair amount of case loss in Federal Court, and agreed to lower settlements in the past years.

While Wage and Hour claims cut across all industry sectors, Manufacturers are considered as frequent targets of private litigation. Manufacturers often employ hourly wage employees that make them more vulnerable to such kind of lawsuits where they may have to pay hefty amount to employees. Allegations are directed at an employer’s payroll and timekeeping practices, which easily involve wage and hour claims and it may easily involve into multiple claimant cases.

In order to keep themselves away from such lawsuits, employers should track and document hours worked for each employee and should bring up other practices like keeping themselves updated regarding the classification decisions regarding exempt, non exempt and other status.