Clock Work: Wage and Hour Cases Top Employment Class Actions

In December 2009, a plaintiffs firm filed collective actions against AT&T subsidiaries in Atlanta and San Francisco federal courts, seeking $1 billion in damages and back pay for approximately 5,000 current and former workers. The lawsuit alleges that the company misclassified first-level managers as exempt from overtime pay.

Despite the huge potential liability, news of the case made barely a ripple in the employment law community, an indication that Fair Labor Standards Act (FLSA) claims seeking huge damages have become almost routine.

In 2009, wage and hour litigation continued to outpace all other types of workplace class actions, according to Seyfarth Shaw's Sixth Annual Workplace Class Action Litigation Report, released in January. Collective actions under the FLSA outnumbered all other types of private employment class actions for the fourth straight year, and claims under state laws increased as well. The report predicted more of the same in 2010.

Quick Return

There are several theories on why wage and hour class actions have proliferated faster than other employment cases. Maatman says the plaintiffs bar found it could realize a quick return on FLSA cases because the requirements for certifying a class are lower than for ERISA or Title VII claims. Section 216(b) of the FLSA basically just requires the plaintiffs lawyer to show that people in the proposed class are "similarly situated," according to Maatman, while other class actions must meet the stricter tests of Rule 23 of the Federal Rules of Civil Procedure.

For the plaintiffs bar, those cases often lead to quick, big paydays once they certify a class. "When employers look at these cases and calculate the potential damages, they resolve the claims because it's expensive to litigate the question of whether the employees are exempt," Mellk says. "We are seeing plaintiffs lawyers climbing out of the woodwork because these cases tend to settle and the attorneys fee component [of the settlement] is significant."

Siegel says the FLSA's lack of clarity on who qualifies for an administrative exemption puts employers in a bind.

Senior Editor

Mary Swanton

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