Topic: Wage & Hour

In early May of 2010, a Federal Court in Western New York dismissed a potential wage & hour class action lawsuit brought against Black & Decker. In Kuebel v. Black & Decker (U.S.) Inc., an hourly employee claimed that he was discouraged from reporting all of his hours and overtime. The court found the employee’s testimony unreliable, and completely dismissed the employee’s individual claims, and all the potential class’s claims as well.

During last year’s Presidential campaign, Obama made repeated promises to “step-up” enforcement efforts to help protect American workers.

Now Obama is really delivering on his Campaign promises. And the proof is in the numbers.

It goes without saying that our new President has entered office in the toughest of economic times. My focus? Diving into the details of his hefty labor agenda.

Obama hasn’t been shy about his support of full civil rights, and his unwavering commitment to ensuring that US workers are paid properly for their time (check out the White House blog entry on this topic).

Let’s just say that when it comes to fair pay issues, there’s a lot of energy in the system.

ELT just wrapped up a survey of more than 2,000 legal, ethics, and HR professionals and the results are eye opening. 60 percent of respondents reported that either their employees were not accurately reporting all hours worked, or they didn’t know if they were. More than 40 percent of respondents were not confident that their employees even knew how to file a wage and hour complaint - a gaping hole that drastically increases liability, and that the plaintiff’s bar is eager to jump in.

I don’t get to blog very often on positive developments in the world of wage and hour. It seems like it’s always down, down, down with no bottom in sight. But today, I’m actually passing on a bit of good news, at least for California employers.

The Fourth District Court of Appeals in San Diego issued its ruling in Brinker Restaurant Corporation v. Superior Court, No. D049331 (July 22, 2008), and put to rest (pun intended) a vexing meal and rest break issue.

When it comes to ethics and compliance training, I constantly find myself talking with in-house counsel about how to allocate the corporate legal budget. Where should the money be spent, and how can those decisions be justified? Sobering up to the current economic conditions (which are only going to get worse) makes the pressure around those budget allocation decisions even more extreme.

Plenty of organizations get bogged down in the smoke and mirrors of intricate compliance risk assessments and the infamous “training needs analysis” (usually run by a vendor who conveniently, also sells training). But when it comes to the baseline training that should drive the foundation of spend decisions, it’s really not that complicated. The core curriculum should be comprised of those areas where: (1) training is legally mandated, and (2) there is the greatest exposure based on actual litigation trends.

The first driver is pretty simple – frankly, because there aren’t that many true mandatory training laws. Most are concentrated in the areas of harassment and discrimination. (For a detailed overview, check out ELT’s mandatory compliance training summary.)

The second is a bit more complicated, and of course more fluid. You have to look at the actual litigation data from recent years. Luckily, we lawyers love to research this stuff, and write about the data at length – so the information is easy to come by. Take the recently released fourth Annual Workplace Class Action Litigation Report from Seyfarth Shaw LLP. It analyzes rulings and decisions in 507 leading class-action and collective-action cases against employers in all 50 states, along with key settlements. The report’s chief conclusions are that the rapid pace of wage-and-hour litigation is likely to continue this year, and that workplace litigation, especially class action and multi-plaintiff lawsuits – “continues as the chief exposure driving corporate legal budget expenditures.”

Employers are desperately searching for wage and hour solutions. In the past few years, an astonishing number of organizations have been beaten down by litigation and expensive settlements, along with a daunting array of state and federal laws. To give you a sense of the scope of the problem, wage and hour class action claims now outnumber all federal discrimination class actions claims, combined.

Just yesterday, IBM announced plans to change the base pay and status of 7,600 workers. IBM will lower base salaries for these employees (6% of its workforce) and make them all overtime eligible. At the end of the day, employees shouldn’t see a significant change in their take-home pay – it will just be paid on slightly different terms, and workers will need to be diligent about properly recording their hours.

What motivated IBM to make this decision? A $65 Million settlement in 2006 for unpaid overtime (OT). IBM was hit with the kind of wage and hour case employers are terrified of facing – a class action claim that workers who are classified as exempt from OT are actually OT eligible. It’s typically a no-win situation for the employer, because when workers have been classified as exempt, detailed records of the hours they’ve worked simply don’t exist. That makes the job of plaintiffs’ counsel easy – and mighty lucrative. The burden of proof rests on the employer to prove employees did not work overtime, and without extensive documentation, that’s a tough row to hoe. Add in the ease of class certification with these types of cases, and you see why employers are facing a tidal wave of wage and hour litigation.