Labor Law Federal agencies go after violators of wage and hour laws More employers than ever are facing class actions

By Kimberly Atkins

The Daily Record Newswire

One management-side labor and employment law firm has a message for its clients: you are in danger of being sued by your employees, and recent initiatives by federal agencies are making that danger even greater. What used to be small, resolvable workplace matters, it says, are turning into systemic investigations and broad-based lawsuits.

"Employers have been besieged with class actions and collective actions" in wage and hour matters, said Michael S. Kun, a member of the Labor and Employment practice in the Los Angeles office of EpsteinBeckerGreen, at a recent firm-hosted symposium in Washington, D.C.

But plaintiffs'-side labor and employment lawyers say federal agencies are simply devoting necessary attention to workplace wrongdoers.

"The Department of Labor is taking a much more aggressive approach of going after employers who violate wage and hour laws, misclassify employees and don't pay their employees overtime," said Anthony J. Lazzaro, who represents employees at the Lazzaro Law Firm in Cleveland.

"I think there is a mentality among employers that it is ok to cut corners and cheat employees a little bit at a time every day and flout wage and hour laws," said Mark Potashnick, an attorney at the employee-side St. Louis firm of Weinhaus & Potashnick. "It's become an en vogue way to increase the bottom line."

At the EpsteinBeckerGreen event, panelists said that wage and hour litigation has been on the uptick over the last decade, with more than 300,000 employees receiving a total of $180 million from Fair Labor Standards Act claims in 2008 alone.

And more employers than ever are facing class actions, the panel asserted. In California, wage and hour-based class action claims have surpassed employment discrimination class actions, said Betsy Johnson of EpsteinBeckerGreen's Los Angeles office.

She pointed out some new areas of focus, including employee misclassification claims, conversion claims and an increase in overtime charges from nonexempt workers who claim they work after hours via BlackBerry.

"The plaintiffs' bar is getting more creative," Johnson said. "Most of the low-hanging fruit has been plucked. We are now seeing a more creative approach."

New DOL initiatives will only boost the number of lawsuits employers will face in the years to come, management-side lawyers claimed. Specifically, they cited the DOL's "We Can Help" campaign, which uses a website and public service announcements featuring actors like Jimmy Smits to explain how to file a wage and hour complaint.

Panelists also noted "Right to Know" regulations that require employers to analyze their employee classifications and explain to all workers, including contractors, exactly how they are being classified.

Unlike conversations with in-house counsel, such conversations are not protected by privilege, noted David L. Barron of EpsteinBeckerGreen's Houston office.

"You are effectively creating Exhibit A in a lawsuit against you," he said.

Another new DOL program, the "Bridge to Justice," was also criticized. Under that program, to alleviate backlogs in investigations of wage and hour claims the DOL directs some workers to private attorneys though a referral service run by the American Bar Association.

"They stop short of actually driving the plaintiff to the plaintiffs' attorney's door," quipped Kun. The measure will "absolutely lead to more litigation," he said.

Kun said efforts to aggressively go after employers with wage and hour claims don't just affect wrongdoers.

"Everyone wants to comply," Kun said. "But sometimes complying with all these laws is difficult."

But Potashnick disagrees with the notion that putting a worker in touch with an attorney necessarily leads to a lawsuit.

"It is in our best interest as plaintiffs' attorneys to pick quality cases because we are doing this on a contingency basis," he said.

Lazzaro, who participates in the "Bridge to Justice" program, said the need is real.

"What used to happen is that a person would make a complaint [with the DOL] and it would sit for a long period of time and nothing would happen," he said. "The employee would be turned away without being told what to do or where to go."

Lazzaro said the program also helps workers find "lawyers who are willing to take the smaller cases that the DOL can't afford to handle."

The Equal Employment Opportunity Commission has also taken a more aggressive approach on the employment discrimination front, said EpsteinBeckerGreen's Kara Maciel, who works in the firm's Washington office.

Maciel said that individual discrimination claims are more frequently turning into systemic discrimination investigations, with the EEOC using its subpoena powers to conduct broad probes of employers' practices.

It creates a "sue first, investigate later" message from the agency, she said.

But Potashnick discounted the notion that federal agencies have an agenda of boosting lawsuits against employers.

"I don't think it has anything to do with anything with the DOL or EEOC," he said.

Management-side attorneys stressed that there are several steps employers can take to protect themselves:

Include arbitration agreements in your employment contract.

According to the panelists, arbitration clauses can be very useful in staving off class actions.

Although the U.S. Supreme Court recently ruled in Stolt-Nielsen v. AnimalFeeds International Corp. that class actions cannot proceed where parties have not expressly consented to such actions in the arbitration agreement, employers should still be proactive.

"As an employer, I wouldn't rely on silence," said Johnson.

Audit yourself.

On at least an annual basis, all employers should review not only their employee handbooks, but also take stock of their classification systems, compensation statistics based on race, gender and other factors, employee evaluations and other information that will be crucial if faced with a lawsuit.

Defend yourself -- but only when it's wise to do so.

Employers faced with a systemic investigation from the EEOC should not be afraid to fight, said Maciel.

"Don't be afraid to challenge overbroad subpoenas in court," she said.

But in some cases, taking a gentler approach could be beneficial.

"I can tell you from experience that a phone call by the employer [to an EEOC] investigator can go a long way [toward] reducing the scope of that investigation," said A. Martin Wickliff of EpsteinBeckerGreen's Houston office.

Published: Wed, Feb 2, 2011