By KRISTEN B. FRASCH, managing editor of Human Resource Executive magazine, a sister publication of Risk & Insurance®, where this article first ran
Citing it as a national trend that is likely to continue through 2010, employment law firm Seyfarth Shaw released its sixth annual Workplace Class Action Litigation Report showing a 44 percent increase in 2009 in nongovernment wage-and-hour settlements, compared to 2008.
The combined value of the top 10 wage-and-hour settlements pursued in federal court under the Fair Labor Standards Act went from $253 million in 2008 to $364 million in 2009--a figure that "outnumbered all other types of private class-actions in employment-related cases," according to the report.
Since the firm began publishing the report six years ago, "both the number of cases filed and the financial exposure that they pose to companies has increased exponentially," said J. Stephen Poor, chair and managing partner of Chicago-based Seyfarth Shaw.
Michael J. Gray, labor and employment attorney in the Chicago office of Jones Day, describes the class-action, wage-and-hour phenomenon as a continual climb "industry-by-industry, state-by-state."
"It started in California and moved to New York," said Gray. "Now, a staggering number of cases are being filed in Florida every day."
According to Seyfarth Shaw, there is also significant growth in wage-and-hour litigation centered at the state court level, and especially in California, Florida, Illinois, New Jersey, New York, Massachusetts, Minnesota, Pennsylvania and Washington.
Gray, who concurs with the study's findings, said he's been seeing "a bunch of new litigation pertaining to employees' breaks and use of those breaks."
There are also "a slew of new cases in the healthcare industry and in other industries, such as meatpacking," he said, where the time it takes to change uniforms or prep for a job, or even log on and off of one's computer, are central to the arguments.
Michael J. Lotito, a partner in the San Francisco office of law firm Jackson Lewis, said the reason there are so many lawsuits--his firm is "currently handling about 250 class-actions--(and) almost all are wage-and-hour"--is that "the law is archaic."
"We are applying 1930 workplace rules, which made sense when almost everyone responded to a whistle at work, to the 21st-century workplace, when many people are working someplace other than ... well ... at work!
"Plaintiff lawyers are creative," Lotito said. "Companies in the same industry tend to adopt similar workplace rules. (Saying,) 'Everyone in the industry does it this way' is an annuity to a creative plaintiff's lawyer."
Attorney Gerald Maatman oversaw the Seyfarth Shaw report, which analyzed 715 class-action and collective-action court rulings involving claims against employers last year, and found that plaintiffs' lawyers increased the pace of the Fair Labor Standards Act and the Employment Retirement Income Security Act class-action filings seeking recovery for unpaid wages and 401(k) losses.
Wage-and-hour litigation is proving especially attractive to the plaintiffs' bar because it is much easier to get such cases certified as class-action lawsuits than other areas of employment law, said Maatman.
Compounding this, Lotito added, is the fact that "employees are worried. They are either on unemployment, were on it but it ran out, or know someone who is or was or is afraid to be. (In short), they are looking for ways to obtain compensation."
Michael J. Ossip, a partner in the labor and employment practice at Philadelphia-based Morgan Lewis and a national co-chair of the firm's wage-and-hour practice, agrees that uncertainty is fueling the trend.
"There's a general line of thinking in employment law that, while an employee has a job, he or she will be much more reluctant to file suit against his or her employer," even if there is a disagreement. Once the job is lost, which has been the case for millions of Americans, he said, "the sentiment becomes, 'Now that I'm unemployed, I'm going to pursue it.' "
Despite the talk of an imminent economic recovery, said Ossip, "the likelihood that (companies) are going to get hit by one of these class-action suits is now much more likely."
Plaintiffs' lawyers are getting much more aggressive, he said, in "putting state actions together and turning them into federal class-action cases."
Although the attorneys admit that the Obama administration will make it easier for employees to file class-actions and for unions to help them, there is "much more to this not attributable to the administration," Ossip said.
A good takeaway, said Gray, is for HR and risk managers to not wait.
"If you're paying attention to the types of cases, you can get out ahead of them and fix your practices that need to be fixed, and clarify things that need to be clarified, such as wording in the employee manual, how you're handling meal breaks, the list goes on ... ," he said.
"Coming out of the downturn," he added, "many, many companies lost people and were forced to downsize, and many people took on additional duties then.
"We have many clients who have gone through very difficult restructurings where people in certain jobs are now actually doing very different things than what people in those jobs used to do," he said.
"Now that the economic waves have receded a little," he also said, "now's the time to see if managers are doing far more nonmanagerial work. Or you could have exempt administrative people who are now nonexempt. You may even have nonexempt people now exempt, so that angle could be very helpful to you."
March 1, 2010
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