2015 FLSA Litigation: On the Rise

On Behalf of | Dec 7, 2015 | Fair Labor Standards Act (FLSA) |

During the last 15 years, wage and hour lawsuits filed in federal court have risen over 450%. According to the Judicial Resource Center, 8,781 Fair Labor Standards Act lawsuits were filed in 2015, which is a 7.6 percent increase from 2014. This year has seen new federal labor proposed regulations, the fight for higher minimum wage, an increased scrutiny on independent contractor classification and joint employer status. Experts believe these events, changes and public awareness have contributed to the rising onslaught of wage and hour suits. [1]

[1] http://www.bna.com/uptick-flsa-litigation-n57982064020/

FLSA litigation is forecasted to rise into 2016 due to several factors. Employers have classified employees as contractors in order to save labor and wage costs. However, this practice has recently come into the news and under criticism. In 2015, a group of Uber drivers filed suit against the company contesting the industry practices of treating drivers as contractors deprived them of benefits which are available to employees.

This year, the issue of increasing minimum wage has been a heavily debated subject. There has been a push to raise the federal minimum wage from $7.25 to $15 per hour. Workers across the nation have been protesting for a federal wage increase, which has led to a public debate about hourly wage issues.

Additionally, the Department of Labor set forth a proposal to revise the regulations on the “FLSA exemptions. Currently, the Fair Labor Standards Act (FLSA) exempts certain administrative, outside sales, and other “white collar” employees from receiving overtime wages, if they earn at least $23,660 annually ($455 weekly) and exercise certain amounts of independent judgment and discretion in performing their job duties. The proposed regulations, which are set to go into effect mid-2016 raise the threshold to $50,440 ($970 weekly). These new changes to the regulations will alter the way employers will determine an employees’ exempt status and are expected to cause further litigation as private businesses grapple with compliance.

Finally, there has also been increased attention to the status of a company as a joint employer. In today’s workplace, it is becoming more common for employees to be employed by a third party business or staffing company. Under the FLSA and other federal laws, a joint employer may be held liable for labor violations and is required to participate in collective bargaining. Several recent NLRB rulings have broadened the category of who may be a joint employer. The Browning-Ferris Decision, issued earlier this year, held that two or more entities are joint employers of a single work force if they are both employer if they share or codetermine matters governing the essential terms and conditions of employment. Essential terms and conditions of employment include: determining the number of workers to be supplied, setting work hours, controlling seniority, approving overtime, assigning work and determining the manner and method of work performance. An entity no longer is required to have immediate or direct control over employees to be named as a joint employer.

This year has been a part of a decade long trend of rising FLSA litigation. Employers should be aware and consult counsel for any questions regarding their or their employees’ status under the FLSA. As FLSA lawsuits increase, it is apparent that the law is in a state of flux, as courts and lawmakers try to reconcile the modern work place and employee, with a law enacted in 1938.