Wage and Hour Lawsuits – Be Warned!
It is summer and I am always searching for new and interesting issues to talk about. One issue that has come to my attention is the abuse of wage and hour lawsuits and California is a hotbed for them.
A recent article in Corporate Counsel confirms just how popular they are with plaintiffs’ lawyers. For the fifth year in a row, U.S. employers have seen an increase in the number of wage and hour lawsuits filed against them in federal court, according to calculations by the Federal Judicial Center. Plaintiffs brought 7,764 suits between April 1, 2012 and March 31, 2013, which is about a 10 percent increase from the prior year. According to the article, ten years ago these lawsuits were described as the flavor of the month, but they are here to stay. The first major spike in the number of federal cases occurred in 2003, when the number of these suits nearly doubled from 2,035 to 4,055. By 2007 they had increased to 6,786.
The abuse of wage and hour lawsuits in California has been devastating to small businesses. In one such case that affected CALA Co-Chair David Houston, his business was targeted by personal injury lawyers who accused him of not properly documenting his workers’ breaks, even though they had taken the breaks in question. The lawsuit cost him almost $1 million.
This article only focused on federal cases, so just think how many of these cases are filed in California’s state courts. And from what I’ve seen, usually the plaintiff’s lawyer walks away with the bulk of the settlement and the “victim” walks away with a small check. The bottom line is the abuse of wage and hour laws impede the ability of businesses to expand in this state, hurting job creation and stifling economic development.