By Jacqueline Bell | Law360
As the number of Fair Labor Standards Act complaints filed in U.S. federal courts continues to climb, attorneys say the more modest growth in new cases over the past few years could be chalked up to aggressive efforts by major employers to improve their payment systems, keep a close eye on managers and never let their guard down.
The numbers of FLSA complaints filed in U.S. federal courts has soared for more than a decade, according to statistics kept by the Administrative Office of the U.S. Courts. The number of suits filed per year has fluctuated since 2002, but overall has moved relentlessly upward. That hasn’t changed, but Law360’s own analysis of federal court records from 2012 to 2014, shows that in the past few years the growth in FLSA complaints has been more measured than in previous years, with 2014 marking a 3.3 percent increase in complaints filed over the year before.
Last year’s more modest level of growth in the number of federal FLSA cases indicates that the practice area is far more sophisticated and seasoned than it was in the early years of its development, said Justin Swartz, a partner at Outten & Golden LLP, who represents employees.
“I think that the number of wage-and-hour lawsuits grew so rapidly for so many years because workers became increasingly aware of their rights and their ability to protect themselves. The practice area is more mature now, and we don’t see as rapid a rate of growth,” Swartz said.
But defense attorneys say major employers have also learned some hard lessons from the boom in FLSA litigation over the past decade and have been working to fill gaps in compliance and make sure their pay practices are sharply in line with the law — efforts which may be tapping the brakes on the growing number of complaints.
“Employers are paying closer attention to their pay practices because the stakes are so high,” said Kathleen Caminiti, partner at Fisher & Phillips LLP.
Unlike other types of disputes that can crop up between employers and employees, problems in pay are relatively straightforward, both for plaintiffs trying to prove violations and for employers looking to ensure their systems are sharply in line with the law, attorneys say.
Defense attorneys say they have been counseling their clients throughout the boom in FLSA litigation that this is an area where a little vigilance can go a long way.
“If there’s one area of the law you need to be prophylactic about, it’s wage and hour,” said James Nicholas, partner at Mintz Levin Cohn Ferris Glovsky & Popeo PC. “If there’s one thing we can help you with, it’s wage and hour. The liability and the exposure there is going to be much higher than in every other area.”
Other factors are also likely contributing to the modest growth in FLSA litigation over the past two years. For one, the economy has improved from the days of the financial crisis that shook employers in a range of industries in 2008.
“Usually the big bubble of litigation takes place when the economy turns downward and employees become more litigious. With the increasing stability of the economy, it doesn’t surprise me that it’s leveling off, the increase,” said Daniel Abrahams, partner at Brown Rudnick LLP.
In addition, as the practice area matures, some of the more egregious and obvious FLSA violations have long ago been rooted out by plaintiffs, attorneys say, leading to a bit of leveling off in the number of complaints filed, at least until another deep well of problems is uncovered.
“A lot of the low-hanging fruit is gone,” said Allan Bloom, partner at Proskauer Rose LLP. “But at the same time as the low-hanging fruit disappears, you see more plaintiffs lawyers getting into the FLSA game.”
Both plaintiffs and defense attorneys say they’re expecting yet more growth. The Obama administration continues to shine a spotlight on wage-and-hour issues, and minimum wage debates are heating up across the country. Modest growth in FLSA complaints over the past few years does not mean employers should let their guard down, attorneys warn, and all employers must be proactive about checking pay practices, creating a culture of compliance, and ensuring managers are well-trained and properly warned about wage-and-hour pitfalls.
“We’ve been training about this, making sure managers understand that you can’t knowingly condone these violations because you’re putting the company on the hook. It will come out, and when it does come out, it will be bad,” said Gail Gottehrer, partner at Axinn Veltrop & Harkrider LLP.
Attorneys that represent employees say plenty of employers still fail to pay proper attention to their pay practices — some intentionally. These attorneys expect the number of cases filed in U.S. federal courts to continue to climb as workers become ever more aware of their rights.
“FLSA collective actions are old news at this point, but much like race discrimination persisting 50 plus years after Title VII’s passage, there is no shortage of employers pushing the envelope. The risk reward is apparently such that employers would rather roll the dice and wait to get caught,” said attorney Josh Van Kampen, head of Van Kampen Law PC, who represents employees.