According to data obtained from the Administrative Office of the U.S. Courts, the number of wage and hour complaints being filed by American workers — on the rise since 2000, have reached a 20-year high. In the 12-month period ending on March 31 of this year, 7,064 lawsuits were filed claiming violations of federal laws regarding wage levels, employee classification, overtime pay and other work regulations. In the same period in 2000, the number filed was only 1,854.
Juxtapose that number with a U.S. Department of Labor study from 2000. In that report, the Labor Department estimated that between 10 and 30 percent of companies in the nine states surveyed were misclassifying workers. In wage and hour law, this typically means the unlawful practice of mis-categorizing low-level workers with no real authority as salaried employees who are not entitled to overtime pay.
Many experts believe the main reason for the noteworthy increase in complaints is the bad economy. In particular, the issue may be firings, layoffs and the ever-increasing substitution of independent contractors for employees with benefits.
A prominent New York employment law attorney pointed out in an interview that high unemployment and job insecurity gives employers a great deal of leverage to set up their wage and hour systems to benefit their own interests. Workers worried about losing their jobs feel that they have no choice but to make the best of the situation. Once they’ve lost those jobs anyway, however, the situation changes.
“As unemployment goes up, people get laid off and they’re no longer worried about retaliation,” he told reporters.
Employees’ growing awareness of their rights may also be a factor in the increase. According to the Federal Judicial Center, lawsuits under the Fair Labor Standards Act jumped from 2,035 in 2002 to 4,055 in 2003 while Congress was debating amendments to the law.
The FLSA governs issues such as employee classification and which workers are entitled to overtime pay. The law itself may contribute to the volume of complaints, as a number of ambiguities in the language have led to conflicting conclusions by different courts.
Some workers are exempt from the FLSA, including executive, professional and computer programming workers, among others, which means they are not entitled to overtime pay. The standard for determining whether someone is in one of those categories is “the exercise of discretion and independent judgment with respect to matters of significance.” What precisely that means in an individual situation is a complex question, and it has led to numerous lawsuits.
When you consider the recent class action lawsuits brought by home mortgage consultants against Wells Fargo & Co. and by drivers against FedEx Ground, change may be coming. According to the New York employment law attorney, the growth in the number of wage and hour complaints has begun to seize the attention of corporate America.
Source: BloombergBusinessweek, “Worker Wage-and-Hour Suits Rise in Difficult Labor Market,” Emily Grannis. Aug. 15, 2012