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Worker-Friendly Rules Keep FLSA Suits At Record Highs

Law360—Aaron Vehling

Federal courts are on track to field a record number of wage-and-hour suits this year, according to a recent Syracuse University study, a trend attorneys attribute to an increased awareness of proposed worker-friendly overtime and classification changes that will ensure the upward trend continues beyond 2015.

Federal courts reported 761 new Fair Labor Standards Act filings in August, indicating a fiscal-year pattern that, if continued through the end of the fiscal year this month, would yield 8,820 FLSA lawsuits in fiscal year 2015, according to a study released Wednesday by Syracuse University's Transactional Records Access Clearinghouse.

“This would be the largest number since employment levels tumbled after the 2008 financial crisis,” the study says.

Overall, the data show that FLSA suit filings are up by about 21 percent from their levels five years ago, and up about 15 percent from last year, according to TRAC’s report.

TRAC’s predictive report arrived just over a month before the Bureau of Labor Statistics issues its official report for fiscal year 2015, and at a time when the Obama administration has increased its focus on issues such as minimum wage, overtime eligibility and worker classification.

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Management-side attorneys cited several factors for the increase, including greater awareness of rights under the FLSA because of media coverage and discussions about action by the DOL to expand worker eligibility and clarify classification of workers as employees.

There has been a significant focus on the DOL’s proposed rulemaking on overtime exemptions, for which people and organizations submitted nearly 250,000 comments before the comment period closed earlier this month, according to Alfred.

The rule as proposed would double the annual salary threshold for workers to be exempt from overtime pay, but in final form it could also change the duties test to such an extent that it would be much more difficult for an employee to be exempt.

Add to that DOL Wage and Hour division head David Weil’s "administrator’s interpretation" suggesting that most positions should be classified as employees and not independent contractors.

Rachel Bien, a plaintiffs' side attorney at Outten & Golden LLP, said both of those DOL measures could be contributing to more lawsuits, but pointed out there’s a reason the Obama administration would need to focus on these issues in the first place.

“I’ve been doing this work for about nine years,” Bien said. “One thing I’ve seen throughout that time is that wage-and-hour violations are, unfortunately, pervasive. I think been consistent throughout my experience.”

In the length of time the trend has been most pronounced — in the last 10 years or more — the nature of how people work has changed considerably, Bien said.

The traditional model of an employee going to the office, working and coming home has been replaced with arrangements such as working remotely via contract and freelance arrangements that have “resulted in greater uncertainty about whether workers are covered under the FLSA.”

“Employers are racing to catch up … and err on the side of leaving people outside of coverage,” she said. “This has resulted in more potential violations.”

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