Today, the Federal Judicial Center released its annual statistics of the types of lawsuits filed in federal courts throughout the country. The result for wage and hour lawsuits? A remarkable increase of 10% for the reporting year ended March 2013 over the previous 12-month period.
7,764 federal wage and hour lawsuits were filed from April 1, 2012 to March 31, 2013 (the reporting year used by the FJC) as compared to 7,064 filed during the previous reporting year. This sharp increase only applies to federal, not state court cases. We suspect (although precise data is not available) that state court filings, especially in key states like California, Illinois, New York, New Jersey and Massachusetts, have at least similar increases in state court wage and hour lawsuits.
We have seen spikes in the number of federal court wage and hour lawsuits in prior years. For example, 2011 saw a 15% jump in wage and hour lawsuits over 2006. Many lawyers and HR professionals, however, hoped that the modest increase between 2011 and 2012–barely 1%–was a sign that the pace of wage and hour claims was slowing. Today’s release of the 2013 data demonstrates that wage and hour lawsuits continue to pose the greatest risk of employment litigation to U.S. employers. See, Seyfarth Shaw’s bar graph of wage and hour federal court filings since 1990. (here)
So, why the increase? As we continue to analyze the newly released data, we see a number of reasons that may explain this sharp rise in wage and hour lawsuits:
- The improving economy may provide incentives for plaintiffs’ counsel to sue new and relatively unsophisticated companies, employers whose workforces are growing, and companies whose improved financial position has made them more attractive targets.
- The economic recovery has seen an increase in employment demands on all employees, both exempt and non-exempt, which cause them to question their employer’s pay practices.
- More lawyers who had not considered wage and hour claims in the past–both employment specialists and general practitioners–are now filing wage and hour lawsuits, perhaps motivated by large settlements in past cases.
- Attorneys in geographic areas that traditionally have not seen a large number of wage and hour filings have begun to focus their practices on those claims based on successful lawsuits brought by plaintiff-side attorneys in other jurisdictions.
- Employers continue to struggle to comply with the ever increasing complexity of federal and state wage and hour laws and regulations, especially in today’s technological workplace.
- Employees are more sensitized to wage and hour issues, at least in part as a result of their access to social media.
Taking into account the USDOL Wage & Hour Division’s recent focus on a number of specific industries, such as retail, hospitality, financial services, insurance, staffing, and construction, we believe this upward trend in wage and hour lawsuits is likely to continue. As a result, employers should continue to focus attention on this challenging area of the law and review their wage and hour policies and practices.