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May 10, 2010
DOL Crackdown, Appeal of Overtime Suits Prompt Need for HR to Be Wary

Employers need to be wary of potential wage and hour violations, given recent multi-million-dollar settlements, a push by the U.S. Department of Labor (DOL) to crack down on violators, and incentives for attorneys to file wage and hour lawsuits, Laura P. Worsinger, Esq., said in a BLR webinar titled "Reducing Overtime Costs: What You Legally Can—and Can't—Do to Keep Workers at Their Straight-Time Rates."

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DOL getting aggressive. In 2010, the DOL announced plans to be more aggressive in enforcing the FLSA and asked for additional funding to hire hundreds of new compliance officers for the Wage and Hour Division, Worsinger said.

Lawsuits appealing to plaintiffs' attorneys. Meanwhile, overtime lawsuits are still very appealing to plaintiffs' attorneys, she says. That's because…

  • Lawsuits can be filed by one or more individuals as collective or class actions, thereby adding hundreds or thousands of potential claimants;
  • The relief that can be awarded includes not only unpaid wages but also liquidated damages and attorneys' fees;
  • The costs of defense can be daunting; and
  • The high stakes and defense costs for employers prompt many to choose astronomical settlements even in the face of claims with questionable merit.

Attorneys who sue an offending employer for unpaid wages are entitled to recover attorneys' fees, costs, and interest. Attorney fees can amount to 30 percent to 40 percent of recoveries as a result of the Lodestar factor (i.e., attorneys can multiply the reasonable amount of hours they spent on a case by the reasonable hourly billing rate for purposes of calculating an award of attorneys' fees).

Biggest hit from three types of claims. Three types of claims made up the big overtime pay suits and settlements in 2009:

  • Overtime work "off-the-clock";
  • Misclassification of employees as exempt from the overtime requirements; and
  • Misclassification of workers as independent contractors not subject to the overtime pay requirements of the FLSA and state law.

Laura P. Worsinger, Esq. is Of Counsel with the Los Angeles office of Dykema Gossett PLLC. She has broad counseling and litigation experience and specializes in the defense of employers in individual and class actions involving wage and hour violations, misclassification, discrimination, wrongful termination, and other employment-related proceedings. She can be contacted at lworsinger@dykema.com.

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