Litigation Targets

WASTE COMPANY OWNERS could be among the vast array of employers targeted by a new wave of lawsuits. The claims, which are based on alleged violations of state and federal fair-wage laws, aim to recoup unpaid wages for overtime. Moreover, the lawsuits often attempt to combine the claims of many employees in so-called “collective actions” under federal wage laws and in “class actions” under state laws.

Plaintiffs' lawyers find it more efficient to collectively present substantially the same legal arguments for similarly situated workers in one pay-related proceeding against a single corporate defendant, and the law affords them a way to do so.

For years, cases seeking back wages arose, for the most part, in the retail sector. Now, however, claims are being filed for low-level managers, information technology specialists, drivers and sales staff.

Employers, so the argument goes, are keeping a lid on costs by restricting or eliminating overtime (not to mention benefits) and by classifying more and more job categories as independent contractors and, thus, exempt from federal and state wage protections. In 2005, the federal courts resolved some 3,600 lawsuits in which a violation of the federal Fair Labor Standards Act (FLSA) had been alleged. By comparison, less than half that number of lawsuits were handled in 2000.

Edward Harold, a New Orleans lawyer who represents management, told The Wall Street Journal that he has witnessed “an explosion of Fair Labor Standards Act litigation since 2002.” In particular, he mentioned the nearly fourfold increase in suits by groups of workers between 2000 and 2005, which he attributes to sizable fees that plaintiffs' counsel can earn.

To no one's surprise, lawyers who represent workers blame employers for the rise in lawsuits. “People are recognizing that companies have been exploiting workers by not paying them properly,” New York attorney Steven Wittels told The Wall Street Journal. His firm represents a group of warehouse workers who have filed suit against a grocery wholesaler alleging unpaid wages totaling $750 million. If Wittels has his way, the suit will eventually cover 13,000 workers in 11 states.

Some observers think the increase in fair-wage lawsuits is attributable to shortcomings in federal and state enforcement of labor laws. With state and federal prosecutors sometimes failing, for whatever reason, to enforce wage requirements, employees are turning to lawsuits to hold their employers accountable, some argue.

Other legal experts point to the federal overtime rules that were revised and seemingly clarified in 2004. However, much of the growth in wage-related litigation is based on state pay laws, which are often more generous to workers than the federal rules and which allow civil suits by individuals and groups.

To minimize its chances of being the target of such a lawsuit, waste firms should make sure they understand completely the wage laws of all of the jurisdictions in which they operate. For a firm with operations in several states, this can be time-consuming. But, spending a little time and money now is better than spending a whole lot of money in a future lawsuit.
Barry Shanoff
Legal Editor
Rockville, Md.