Wage and Hour Litigation Tops List of Employment Class Action Claims
New Survey Shows Employers are Spending More than Ever on Wage and Hour Compliance Programs to Counter Drastically Escalating Risk
SAN FRANCISCO--(August 25, 2010)--According to a 2010 survey of more than 1,800 senior legal and HR professionals conducted by ELT, leading specialists in ethics and workplace compliance training, one-third of respondents indicated that their organization had been hit with a wage and hour claim in the past year. Accordingly, 54 percent of respondents indicated that despite the troubled economy, their organization has increased its 2010 spend on wage and hour compliance.
"It's like having a security system sign in your front yard during a neighborhood crime wave. It may not provide 100 percent protection against a robbery, but the burglar is likely to go to the less risky house down the street."
Today, wage and hour class actions outnumber all other discrimination class actions combined. With the explosion in wage and hour claims over the past several years, most employers are finally starting to grasp the enormity of this litigation landmine.
"It's been a perfect storm for wage and hour class and collective actions against employers," says Shanti Atkins, Esq., President and CEO of ELT. "Employers are being hit from two sides. On one, there is a better funded, more fully staffed Department of Labor (DOL) that has made fighting 'wage theft' one of its key priorities. On the other side are aggressive plaintiff law firms that literally salivate at these easy-to-identify and easy-to-win, lucrative class actions."
According to the DOL, more than 80 percent of employers are out of compliance with federal and state wage and hour laws. Vowing to fight this standard of non-compliance, President Obama increased the DOL's budget for 2010, which means even stricter enforcement of wage and hour laws and hundreds of additional field investigators. These investigators are tasked with closely examining the pay practices surrounding overtime, off-the-clock work, meal and rest breaks, and auto-deduction at hundreds of employers around the country.
Adding to the risk, wage and hour lawsuits have become a strong focus for the plaintiff's bar. Finding technical violations of antiquated wage and hour laws is relatively simple, and the burden of proof is on the employer who is presumed guilty until proven innocent. This type of litigation also lends itself to a "template" lawsuit where multiple employers can be simultaneously targeted.
The money on the table for wage and hour class action settlements is huge, averaging $23.5M at the federal level and $24.4M at the state level. With the majority of employers already out of compliance with wage and hour laws, these are the kind of open and shut cases plaintiff's law firms love to take on. Although these lawsuits are often positioned as valiant efforts toward worker protection, most of the money ends up in the hands of the attorneys while many class participants see as little as a few hundred dollars.
Employers can protect themselves from wage and hour claims by proactively training their workforce on wage and hour compliance. Not surprisingly, 60 percent of ELT's survey respondents have or are planning to implement a wage and hour training course over the next year. These savvy employers are using training not only to help prevent wage and hour issues in the first place, but to arm their organization with powerful legal defenses in case of litigation. Wage and hour training can help to reduce damage awards by as much as 66 percent.
"Most plaintiff law firms won't want to take on a wage and hour case if the employer has a robust compliance program that includes wage and hour training for employees and managers," says Atkins. Evidence of a consistent and thorough program makes a class harder to certify, a case harder to win and plummets settlement values. "It's like having a security system sign in your front yard during a neighborhood crime wave. It may not provide 100 percent protection against a robbery, but the burglar is likely to go to the less risky house down the street."
ELT's all-new online Wage and Hour course educates employees and managers about the basics of state and federal law as well as company policies. Built in close partnership with Littler, the world's largest employment law firm, the course translates critical wage and hour issues into real-life stories that employees will understand and remember. Full-motion video storylines and interactive exercises bring lessons to life and capture learners' attention.
ELT's course uses smart logic to ensure that each learner is trained on both federal law, and the laws of the state where the learner works. Based on a learner's location, course content is automatically and intelligently configured. ELT is the only training provider in the market to offer this unique capability, helping employers to manage costly state law litigation risk.
ELT provides online training solutions to help employers manage their most important workplace compliance challenges. ELT specializes in the topics that create the greatest legal risks, and where effective employee training can prevent misconduct, establish powerful legal defenses, and help to create a culture of ethics, inclusion and respect. The company focuses on wage and hour training, sexual harassment training, union awareness training and ethics training. ELT features legal content from Littler, the world's largest employment law firm, and is endorsed by SHRM, the world's largest human resources association. ELT's award-winning courses engage employees with compelling stories drawn from actual cases and real events. Leveraging the latest technology and high-end media, ELT's solutions reflect the level of quality that organizations want to associate with their compliance program. With more than a decade of market-tested success and millions of employees trained, ELT is trusted by today's most respected employers. For more information, visit www.elt-inc.com.
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