Employers continue to cheat employees out of wages but FLSA (wage and hour) Class Actions show a small downtick, but FLSA Settlements on the uptick.
Workers and employees kept their lawyers busy in the past few years increasingly filing an array of litigation issues against companies for various employment law violations. Except for case filings of wage and hour class action whose decline last year may be a fluke, employment-related filings increased in 2016. Wage and hour cases generally involve workers who are shorted wages, not paid a premium for overtime, or violation the Fair Labor Standards Act (FLSA) and/or various state laws including California Labor Codes and New York Labor Codes which call for additional rights for workers and penalties against employers.
“Workplace class action litigation risks are at the top of the list of problems that keep business leaders from sleeping at night,” said Gerald Maatman, author of law firm Seyfarth’s annual report that tracks class-action litigation in the country.
The report warns employers that “the private plaintiffs’ bar and government enforcement attorneys are apt to be equally, if not more, aggressive in 2017 in bringing class action and collective action litigation against employers.” It said the former are likely to continue developing new theories and approaches to prosecute successfully many complex employment litigations.
The report advised the employers to identify, address and remediate their vulnerabilities to class action, and place this task “at the top of corporate counsel’s priorities list for 2017.”
In response to the comments and tone from the defense bar, the attorneys of the Wage Authority Group who routinely file FLSA Class Actions indicated, “ Employers should be less worried about litigation and more concerned with doing what’s right and making sure their workers are paid properly. It won’t keep the employers up at night to make sure their offices are safe from honey badger attacks if they’re no honey badgers, so if they’re not forcing their workers to work off the clock or shorting them wages in other ways, there’s nothing to worry about here.”
The report says recent rulings of the U.S. Supreme Court have helped shape and influence class action dynamics. “Over the past several years, the Supreme Court has accepted more cases for review – and issued more rulings – than ever before that have impacted the prosecution and defense of class actions and government enforcement litigation,” Maatman said.
In 2016, the Supreme Court accepted more cases for review and issued more rulings, many of which are posed for ruling this year. But a look at the range of rulings on class litigations handed by the Supreme Court told Sayfarth they can’t generalize the Supreme Court as being pro-business or pro-workers.
Maatman said the key class action decisions this past year – in the Tyson Foods and Spokeo cases – were arguably more pro-plaintiff and pro-class action than business-oriented or anti-class action. But he found the SC decisions are not one-dimensional since some decisions can either be seen as hostile or hospitable to the availability of class actions.
The Wage Authority Group, a group of plaintiffs ’ class action lawyers, said the decisions in Tyson and Spokeo have talking points for each side, but the businesses are upset that the cases didn’t completely shut the door on employee’s rights.
Wage & Hour settlements increasing despite drop in case filings of this type
After an all-time high in 2014 to 2016, the monetary value of top employment related settlements significantly went down in 2016.
Seyfarth reported that both the private lawyers’ and the government’s employment class action bar and enforcement litigators successfully brought their case filings into large class-wide settlements, but they did so at lower values than in 2014 and 2016. The top ten settlements in various employment-related categories totaled $1.75 billion in 2016, which declined from $2.48 billion in 2015 and $1.87 billion in 2014.
The plight of these cases in 2017 will show if the decline last year is the start of a trend or a short-term aberration, the report said.
Meanwhile, it appeared the result of wage and hour settlements differed from the trend last year. Despite the over-all decline in settlement deals in other class filings, the value of wage and hour settlements increased significantly in 2016. The value of the top 10 settlements hit $695.5 million in 2016, a 50 percent increase over 2015’s $463.6 million valuation, and more than triple the $215.3 million valuation in 2014.
the case filings will definitely continue as employers continue to short workers their lawful pay and the employees educate themselves about their rights. The FLSA calls for double damages and attorney fees which is a great hammer in one sense to keep employers compliant, however the statute only goes back three years, so sometimes employers just see how long they can get away with making employees work off the clock, or shaving their time, or committing a swath of other violations including tip credit violations to commit wage and hour violations, according to the Wage Authority Group. However, some states have statutes that go further back. News reports on overtime regulations, or any active media coverage of FLSA [Fair Labor Standards Act] and related wage and hour laws, historically tend to boost filing of lawsuits, Maatman said.
More favorable class certification rulings
Sayfarth’s report highlighted how the federal and state courts have issued more favorable class certification rulings for the plaintiffs in 2016 than in the past years. The favorable issuances are significantly bigger, but the report noted still that employers also won decertification motions at higher rates than in 2015.
Of the 224 wage & hour certification decisions in 2016, there were 195 conditional certification rulings and 29 decertification rulings. In contrast, in 2015, there were 175 wage & hour certification decisions, including 153 conditional certification rulings and 22 decertification rulings.
Much of these likely owe to lawyers’ efforts at crafting refined and more successful class certification theories. The Wage Authority group has commented that law groups like them which handle employment, wage and hour and ERISA class actions have to actively counter the more stringent Rule 23 certification requirements established in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), and Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013) , but the collective action mechanisms in 216(b) allow for a streamlined process of notice to the employees.
Private lawyers expected to fill in the void being left by government enforcement
Sayfarth’s report said that overall, complex employment-related litigation filings increased in 2016 particularly the employment discrimination cases. But ERISA class actions, governmental enforcement litigation, and wage & hour collective actions and class actions decreased in the same year.
It expects that the new FLSA regulations and direction of wage and hour enforcement under the Trump Administration will likely bring change. But, at the same time, the report looks to the private plaintiff’s bar which it expects to rise to the occasion.
“To the extent that government enforcement of wage & hour laws is ratcheted down, the private plaintiffs’ bar likely will “fill the void” and again increase the number of wage & hour lawsuit filings,” Maatman said.