Uptick in FLSA Litigation Expected to Continue in 2016

Bloomberg Law for HR Professionals is a complete, one-stop resource, continuously updated, providing HR professionals with fast answers to a wide range of domestic and international human resources...

By Lisa Nagele-Piazza

Nov. 25 — Federal wage and hour litigation is on the rise and is expected to continue increasing in 2016, employment attorneys told Bloomberg BNA.

Federal courts saw 8,781 Fair Labor Standards Act lawsuits in fiscal year 2015, which is a 7.6 percent increase from the previous year, according to a Nov. 20 blog post by management-side law firm Seyfarth Shaw LLP.

Wage and hour cases filed in federal court have increased about 450 percent in the last 15 years, Seyfarth concluded, using data compiled from the Judicial Resource Center. The firm predicts that the number of FLSA lawsuits in 2016 will surpass 9,000.

The numbers show a widespread increase in wage and hour claims against employers in different industries, Richard Alfred, chair of Seyfarth's wage and hour litigation practice, told Bloomberg BNA Nov. 24. But the retail and hospitality industries have been especially affected, Alfred, who co-authored the blog post, said.

Independent Contractor Classifications Scrutinized

“New federal labor regulations, the fight for a minimum wage hikes and an intense focus on independent contractor classification and joint employer status create a perfect storm for new lawsuits,” Alfred said in a statement.

An increased effort by employers to reduce expenses and shift the cost of labor onto workers is a contributing factor to the rise in FLSA lawsuits, Ben Weber, an employee-side attorney with Lichten & Liss-Riordan PC in Boston, told Bloomberg BNA Nov. 25.

Lichten & Liss-Riordan represents the drivers in lawsuits against Uber Technologies and Lyft Inc. The drivers' independent contractor status is a central issue in those closely watched cases.

Employers are treating as independent contractors, certain workers that traditionally have been classified as employees, Weber said.

Delivery drivers, strippers and “gig” workers have contested industry practices that they claim deprive them of benefits that are afforded to employees but not independent contractors.

But employers contend that independent contractors are free to chose when and where they work and have the flexibility to work for other companies.

Alfred said it isn't clear what percentage of the uptick in wage and hour litigation is attributable to the “on-demand” or “gig” economy, but some percentage is, particularly concerning the use of independent contractors. He said he expects the litigation trend in this area to continue in 2016.

Attorneys agree that the DOL's proposed rule to revise the FLSA's “white collar” exemption has brought attention to wage and hour issues.

The rule would increase the minimum annual salary for the overtime exemption to $50,440 from $23,660. The DOL received almost 300,000 comments on the controversial proposal and expects to issue a final rule in July 2016.

Given the rise in wage and hour litigation, employers should obtain good advice from experienced counsel about their practices and make judgments together with counsel about any changes that need to be made to their current policies, Alfred said.

For More Information

For more information, see Compensation and Benefits Library's FLSA Exemptions chapter.

To contact the reporter on this story: Lisa Nagele-Piazza in Washington at lnagele@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

Request Bloomberg Law for HR Professionals