CHICAGO (Legal Newsline) — 2015 proved to be a record-breaking year for the number of lawsuits filed in federal court under the Fair Labor Standards Act (FLSA), and 2016 will probably break that record, a Seyfarth Shaw attorney says.
According to numbers released by the Federal Judicial Center, litigants filed 8,781 FLSA cases in 2015 (year-end Sept. 30), jumping eight percent from the 8,160 filed in 2014. The increase stems from several sources - growing knowledge of workers’ rights, big incentives for plaintiffs attorneys and the law itself.
“We attribute an increase in wage and hour litigation, first, to the fact that the FLSA is a really old statute. It was written in the 1930s when the labor market was a very different place than the modern workplace, and the rules were written for a manufacturing economy that don’t necessarily adapt well to the modern landscape,” said attorney Kyle Petersen, a member of the Labor and Employment Department at Seyfarth Shaw.
With the swell of smartphones, the ability to work remotely and the expanding gray areas of what classifies employees as exempt, the FLSA can be tricky for employers to navigate.
“Well-meaning employers often get caught up in some of the technicalities and rules that are really hard to apply to the evolving workplace,” Petersen said.
“Another factor I think is that the FLSA and many of the state analogue statutes are essentially strict liability statutes, so it doesn’t necessarily matter if an employer meant well and that they had good intentions.”
On the flip side, plaintiffs attorneys are becoming more familiar with workers rights under the FLSA, which contributes to the rising number of cases. The nuances of the law make it easier to turn a wrongful termination complaint into an overtime wage violation, for example. There is also an incentive for plaintiffs to get a collective action certification under the FLSA.
“It becomes very expensive for employers to defend very early. The cases are really attractive to plaintiffs attorneys because they are low bar to get certified. It drives settlement cost up when you have a conditionally certified cost,” Petersen said.
But attorneys are not the only ones with a growing knowledge of workers’ rights under the FLSA. The advent of social media has created a zipline for news to get to audiences, including legal information that has resulted in a heightened awareness in the work forces about wage and hour issues like President Obama’s white collar exemptions, Petersen added.
“Workers are generally more keyed in and aware of wage payment issues than they might not have been in years past. Through social media, people are able to quickly spread the word, and people hear about the laws and the rules for restrictions in a way that I don’t know they always did before,” she said.
Moving forward, Petersen does not expect the numbers to go down anytime soon. The Department of Labor plans to implement new regulations in 2016, which will likely create a whole new wave of FLSA claims and lawsuits.
So what can employers do to protect themselves against FLSA cases?
“Our experience shows that employers can minimize the risks by anticipating issues that might be lurking in their workplace, identifying points of potential exposure, and then proactively taking steps to correct the challenges that causes them,” Petersen said.
One of the most significant safeguards against FLSA action is training and enforcing compliance in the workplace. Particularly with the new regulations expected to be issued this year, firms like Seyfarth Shaw anticipate a significant increase in the salary basis requirements for the exempt status, which should prompt employers to take a second look at their policies.
“We have seen a lot of employers can be pennywise and pound-foolish. They don’t want to spend the time and money to train their manager and employees on time-keeping and overtime issues so sometimes there is a disconnect between corporate policy and what is happening in the field," Petersen said.
"You have your policy and your practices all lined up but you need to then go the extra mile and train your employees on how to comply."