Dive Brief:
- Federal courts saw fewer Fair Labor Standards Act (FLSA) filings for the fifth year in a row in 2020, according to Seyfarth Shaw LLP's Jan. 5 Workplace Class Action Litigation Report. Wage and hour litigation saw more class and collective actions certified than any other area of workplace law, however, with the rate of certification success increasing.
- This trend is likely to "explode" in 2021 with the arrival of a more worker-friendly U.S. Department of Labor that is "apt to make supposed wage theft its enforcement priority and to shift its regulatory focus toward a plaintiff-friendly agenda."
- Work from home arrangements drove litigation in 2020 and will continue to do so in 2021, Seyfarth said. Specifically, claims will relate to subjects germane to telework, such as expense reimbursement and off-the-clock work.
Dive Insight:
Workplace class action lawsuits are the most common type of class actions, according to the results of the 2019 Carlton Fields Class Action Survey. The report, which gathered responses from general counsel or senior legal officers at 395 large companies, revealed that organizations spent a collective $2.46 billion in 2018 defending class actions. Labor and employment cases accounted for 26.1% of spending, Carlton Fields found, and companies reported that wage and hour matters were "their top concern in this category." In 2020, organizations shelled out nearly $295 million to settle wage and hour class action claims, according to Seyfarth.
Employers likely rejoiced when, in 2018, the U.S. Supreme Court held in a 5-4 decision that employers could require workers to arbitrate disputes individually, waiving their right to class or collective actions. Attorneys urged caution, however, and recommended employers refrain from widespread arbitration mandates, as arbitration can be expensive and create backlash, especially if claims contain allegations of sexual misconduct.
There has been some movement to hedge the freedom the decision granted employers. Lawmakers introduced the Forced Arbitration Injustice Repeal Act (FAIR Act) in 2019, calling forced arbitration "unfair, unjust and un-American." The bill would allow employees and consumers to choose arbitration at will. The U.S. House of Representatives passed the bill in September 2019, but the U.S. Senate has yet to vote on the legislation.
Even without the FAIR Act, employers will likely see more wage and hour collective actions in 2021, due to the incoming, employee-friendly administration, Seyfarth predicted. The Biden administration may focus on raising the federal minimum wage, one attorney previously told HR Dive.
Management-side attorneys identified another factor in wage and hour claims that Seyfarth called out as well: telework. The pandemic has forced many hourly workers to work from home — a rare occurrence in pre-pandemic times, Venable Partner Nicholas Reiter said. Such workers generally have fixed schedules that easily facilitate overtime pay; with many working from home, employees may not have the infrastructure to track hours worked as diligently as previously. "That could be a real risk," Reiter said.
