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Avoiding Wage and Hour Lawsuits in 2020: Lessons from 2019

January 31, 2020 - minute read

Is improving labor compliance one of your company’s goals for 2020? It should be! According to Seyfarth’s 2020 Workplace Class Action Litigation Report—a comprehensive examination of the rulings and settlements of 2019—the threat of workplace class action lawsuits continues to keep business leaders up at night.

Although the report offers ample good news for employers, it also indicates that wage and hour litigation is a real, ongoing hazard. By reviewing last year’s trends and developments, employers can get a better sense of where to focus their labor compliance efforts this year. If you haven’t read the Seyfarth report yet, here are key highlights, particularly for employers managing an hourly workforce.

Five Key Workplace Litigation Trends

Seyfarth’s report noted these five key workplace litigation trends in 2019:

  • Class Action Certifications Increased

2019 marked record-high rates of class action certification (class actions must be certified in court before legal action can proceed). 81% of wage and hour cases, 65% of ERISA suits, and 64% of discrimination complaints received certification last year.

  • More Pro-Business Supreme Court Rulings

The Supreme Court not only accepted more class action cases for review than previously, but issued conservative readings that are generally more pro-business than those of the Obama era.

  • Less Government-enforcement Litigation

Not only did government agencies initiate fewer lawsuits on behalf of workers (for example, the EEOC brought 144 lawsuits in 2019, compared to 199 in 2018), but settlement values decreased. The top ten settlements totaled $57.52 million in 2019, compared to $126.7 million in 2018 and $485.25 million in 2017.

  • Settlement Values Are Down—But Not for Wage and Hour Lawsuits!

2019 settlement values increased slightly from 2018, but are dramatically down overall from previous years. Values decreased in the area of discrimination and government-enforcement cases, but increased with regards to ERISA lawsuits and—notably—more than doubled for wage and hour settlements.

  • #MeToo Litigation Is on the Rise

While the volume of EEOC class actions declined, 28 cases involved sexual harassment and 57 concerned gender discrimination—more than half the agency’s total filings for the year.

The report also noted that workplace class actions are decreasing as a result of the Supreme Court’s 2018 ruling in Epic Systems Corp. v. Lewis, which established that employers may enforce workers’ individual arbitration agreements, nipping class action lawsuits in the bud.

What We Can Learn from 2019’s Wage and Hour Settlements

One of the key takeaways here is that employers continue to pay a high price for wage and hour noncompliance.

Although the number of lawsuits filed under the Fair Labor Standards Act decreased slightly (6,780, as opposed to 7,494 in 2018), they continued to outpace other employment-related complaints. And, as noted above, wage and hour settlement values skyrocketed. The top 10 settlements, which totaled $253 million in 2018, equaled $449 million in 2019.

So, who is getting penalized, and why? There’s much to be learned from 2019’s top 10 wage and hour settlements, including what the violations are and which industries tend to be hit hardest:

  1. $100 million for failure to provide state-mandated meal and rest breaks to security officers; security company. (Lubin v. Wackenhut)
  2. $100 million for misclassifying drivers as independent contractors and depriving them of wages and expense reimbursement; trucking company. (Van Dusen v. Swift Transportation)
  3. $98.8 million for misrepresenting income available to drivers after completing a training program; trucking company. (Roberts v. C.R. England)
  4. $35 million for failure to pay overtime to bank tellers; banking. (Merino v. Wells Fargo & Co.)
  5. $26 million for not paying proper wages to workers; fast food. (Sanchez v. McDonald's Restaurants of California)
  6. $22.5 million for misclassifying workers as independent contractors and denying them benefits; commercial bakery. (Alfred v. Pepperidge Farm)
  7. $20 million for misclassifying workers as independent contractors to avoid paying minimum wage and provide benefits; rideshare company. (O'Connor v. Uber Technologies)
  8. $16.5 million for misclassifying delivery drivers as independent contractors to avoid paying minimum wage and overtime; transportation and logistics. (Carter v. XPO Logistics)
  9. $15.25 million for failing to provide rest breaks to employees; oil refinery. (Valliere v. Tesoro Refining & Marketing Co.)
  10. $15 million for failing to pay telephone reps for work performed before clocking in; call center. (Woods v. Caremark)

Improving Your Wage and Hour Compliance

When you manage an hourly workforce, these wage and hour violations—failure to compensate workers correctly, provide mandated meal and rest breaks, and even classify workers correctly—can be surprisingly easy to make. 

One of the best compliance tools available to employers is HR and payroll technology. Your software should be able to factor in all applicable FLSA mandates—not to mention state and local laws—and calculate payroll correctly, even if yours is a complex labor environment. 

Take a minute to brush up on all top 10 wage and hour pitfalls. If you’re not 100% confident that your current HR and payroll software is doing everything possible to keep you compliant, see how EPAY can. As the leading solution for employers managing an hourly workforce, we offer unique compliance safeguards you can’t find anywhere else. If you’re committed to improving your labor compliance in 2020, the best time to start is now. 

Filed Under: Compliance HR News Workforce Management FMLA