Changing Scenario of Wage and Hour Class Actions | DCR Workforce Blog

Changing Scenario of Wage and Hour Class Actions

wage and hour class actionsWage-and-hour class action suits are the bane of a big employer’s existence.  The evolving regulatory scenario is something they cannot afford to ignore.  The increased use of temporary workers and prominent role of mobile devices in the workplace are driving the surge in litigation.  Legal precedents are redefining the very definition of a “class action”. The sheer size of these cases, the disruption they cause, the large potential damages, the possibility of adverse publicity, and the cost of litigation compel many companies to pay significant amounts to settle these lawsuits.

Many of these suits involve claims of misclassifying workers as exempt from overtime, especially temporary professional workers. Additionally, these claims involve allegations of non-exempt employees being required to work off hours through the use of mobile devices, webmail and social media.  Companies utilizing large numbers of temporary IT specialists or healthcare professionals seem particularly vulnerable to these legal challenges.

A series of landmark decisions passed by the US Supreme Court are setting the precedent for other legal decisions and it is important for employers to know whether they are in compliance, if they wish to minimize or avoid the risk of class action suits making wage and hour claims. Let us take a look at these precedent-setting judgments, beginning with recent rulings regarding the definition of what constitutes a class action. A class action is a lawsuit where a person sues a group of people, a group of people sues another group of people, or a group of people sues a person. Class actions must have certain definite characteristics, including legal claims common to the entire class, the attorneys must be able to represent the interests of the class, and the class must be so large as to make individual suits impractical. In two landmark cases, Dukes v. Wal-Mart and Comcast v. Behrend, the Supreme Count opined that the plaintiffs failed to meet the definition of a “class”. Class certification for class action suits would henceforth be applied only if the employer’s actions resulted in damages to the whole class, in the same way.

The National Labor Relations Board always held that requiring workers to sign an arbitration agreement which made the waiver of a class action as a condition of continued employment violated the National Labor Relations Act. But, the Supreme Court held that courts cannot invalidate class action waivers, even when the individual incentive is too small to arbitrate a claim. An NLRB judge acknowledged that the Board’s stand was untenable in the face of the Supreme Court’s ruling.

Wage and hour claims, litigation, and class actions are brought against employers in increasing numbers all around us. Some preliminary measures, as detailed below, may be adopted by employers to avoid such a contingency:

  • Follow all developments in wage and hour laws on an ongoing basis.
  • Consider the impact of regulations on agency contractors as well as on permanent employees.
  • Require staffing suppliers to have each worker acknowledge in writing that the staffing agency is the supplier of record, exclusively responsible for all wage-and-hour issues.
  • Contractually ensure that staffing agencies who supply resources are properly providing required pay rates, overtime, and other specified benefits.  Be sure that hiring managers are adhering to agreements regarding breaks, overtime pre-approval policies, and more.
  • Establish a clear process to address issues raised by staffing agencies regarding supervisor’s decisions to reject time card submissions.
  • Audit all wage and hour issues regularly and thoroughly. If deviations are found, rectify them as quickly and as completely as possible while making sure that the process is changed, going forward. Particularly focus on systemic irregularities.
  • Do not assume that minor irregularities with low financial impact per employee can be ignored or postponed for resolution at a later date.

Everyone is aware that class action suits, in most cases, end in settlements and for any employer it is always better to avoid ending up at the receiving end of such a suit.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.