Human Resources & Management

Wage and Hour Lawsuits Costing
Employers Millions

Disputes over hourly pay are rising rapidly, with workers winning big judgments against companies.

By Martha Lynn Craver, Associate Editor, The Kiplinger Letter

February 22, 2010

Wage and hour lawsuits are rising, outpacing all other types of workplace class actions. The increase comes as more workers laid off during the recession seek legal remedies. The lawsuits typically revolve around allegations that hourly workers eligible for overtime are misclassified as exempt in violation of the Fair Labor Standards Act.

Last year, the 10 largest private wage and hour settlements totaled nearly $364 million, 44% more than the 10 biggest settlements in 2008. States with the most significant growth in wage and hour litigation are California, Florida, Illinois, New Jersey, New York, Massachusetts, Minnesota, Pennsylvania and Washington, according to law firm Seyfarth Shaw’s annual report on workplace class action litigation.

Plaintiffs’ attorneys gravitate to these cases because they are not that hard to win and can involve big payouts, says Larry Lorber with the law firm Proskauer Rose. “Damages are significant … two to three years of back pay and benefits.”

Uncle Sam is gearing up to play a bigger role, too. The Obama administration’s emphasis on regulation and enforcement will result in more government initiated lawsuits. “The government is hiring and training hundreds of investigators, laying the groundwork to increase and intensify its enforcement effort,” says Gerald Maatman Jr. of Seyfarth Shaw.

To protect against actions, make sure worker classifications are reviewed and updated regularly. Employers also should make sure they have workplace due process procedures in place for workers to bring their grievances to the attention of managers. Employers should investigate and respond to all grievances because that can help ward off further action. “Many employees file a lawsuit when they believe no one in the company is listening to their complaints,” says Maatman.

Here are the ten largest private settlements entered into or paid in 2009, which together add up to $363.6 million:

Wal-Mart Wage & Hour Employment Practices Litigation, $65 million. Workers alleged Wal-Mart intentionally altered payroll records to reduce labor costs. Hale v. Wal-Mart, $55 million. Workers in Missouri claimed overtime violations. Brattain v. Richmond State Hospital, $42.4 million. Employees alleged they were required to work 40-hour workweeks while other state workers only were required to work 37.5-hour workweeks, even though all state employees of the same job classification were compensated equally.

Wachovia Securities Wage & Hour Litigation, $39 million. Employees claimed they were denied overtime pay and other wages.

Westerfield v. Washington Mutual Inc., $38 million. Current and former loan consultants claimed the company failed to pay them for time worked in the morning, evening, during lunch and on weekends.

Barnett v. Wal-Mart, $35 million. Employees in Washington state claimed Wal-Mart facilitated wage abuse practices such as forcing employees to work through breaks, locking employees in stores overnight yet requiring them to clock out and overworking employees who were off the clock.

Parris v. Lowe’s Home Improvement Warehouse, $29.5 million. Workers alleged they were required to perform duties before and after their scheduled shifts for which they were not paid.

Veliz v. Cintas Corp., $22.75 million. Delivery drivers claimed that Cintas misclassified route drivers as exempt employees in order to avoid paying overtime. Heller Ehrman LLP, $19.7 million. Former employees of this national law firm claimed they were denied vacation pay.

Conley v. Pacific Gas & Electric, $17.25 million. Employees alleged they were improperly classified as exempt employees and were denied overtime compensation and paid a salary rather than on an hourly basis.

For weekly updates on topics to improve your business decisionmaking, click here.

• Print
• Comments
• Email
• RSS