Employers should expect the long-term trend towards increased scrutiny of wage and hour issues to continue in 2014. Wage and hour claims currently outpace all other types of workplace litigation and have increased by over 500% since 1990. In FY 2013, the Wage & Hour Division (WHD) of the U.S. Department of Labor recovered a record $280 million in back wages on behalf of more than 260,000 workers under the Fair Labor Standards Act (FLSA).
In the year ahead, the WHD will aggressively focus on some key FLSA-related issues, such as worker misclassification, overtime pay, unpaid internships and off-the-clock work. The FY 2014 budget for the WHD included almost $14 million specifically to combat the misclassification of workers as independent contractors, with an additional $3.4 million to increase the WHD's enforcement resources.
A steady increase in the WHD's resources — its investigative workforce has increased by 40% since 2008 — has allowed the WHD to expand its investigations beyond those stemming from complaints and to independently target specific issues. This has also permitted the WHD to move beyond large employers and take action against small and medium-sized employers within a wider variety of industries.
Many of these WHD investigations reveal widespread employer violations, resulting in monetary awards for a large group of employees. Violations can therefore be quite expensive — average settlement figures have increased in both the total settlement amount and per plaintiff — with employers facing liability for back pay, damages and civil and administrative penalties.
Private litigants have also taken notice of the WHD's focus on wage and hour issues, resulting in a significant rise in civil wage and hour lawsuits. Employers, however, can avoid a WHD investigation or private lawsuit by reviewing their policies on wage and hour issues and training employees on FLSA requirements.