NCPA - National Center for Policy Analysis

Plaintiff's Lawyers Discover Yet Another Lucrative Field

May 30, 2002

The number of suits being filed on behalf of workers who claim their employers shortchanged them on overtime pay has exploded, employment attorneys say. Smelling big payouts, plaintiff's lawyers are rushing to sign up large groups of employees and file collective actions claiming violations of the Fair Labor Standards Act.

One New York attorney describes the stampede as the plaintiff attorneys' "complaint du jour."

  • Overtime rules have been on the books since the 1930s -- generally requiring payment of time-and-a-half to anyone working more than 40 hours a week -- with federal law carving out dozens of exemptions for certain workers, including personnel deemed "managerial," "administrative" or "professional."
  • The lawyers claim companies are classifying workers into these exempt categories to save on labor costs.
  • Most of the major settlements -- which typically run into the tens of millions for larger companies -- have so far involved the California operations of companies, because that state is said to have laws tilted toward the interests of employees.
  • Employers found to have violated the wage and hour laws typically must pay double the back wages owed, plus attorneys' fees.

The stakes can be high. Last year alone, Pacific Bell settled a suit for $35 million, Coca Cola Bottling Company of Los Angeles settled a suit for $20.2 million and Bank of America Corp. settled one for $22 million. Wal-Mart is defending overtime cases in 28 states.

Legal experts say that the advent of flex-time and other changes in the workplace should prompt Congress to revamp the decades-old wage and hour statute.

Source: Michael Orey, "Lawsuits Abound From Workers Seeking Overtime Pay," Wall Street Journal, May 30, 2002.


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