Advisen Loss Insight: Wage-and-hour class actions outpace all others

For the second year in a row, Advisen Loss Insight database logged more wage-and-hour class-action lawsuits than any other type of class-action filing.

Class-action lawsuits related to merger objections have ruled the litigation landscape, but cases involving wage-and-hour disputes have jumped over the last five years while merger-objection cases fell dramatically to meet up with securities class actions.

Wage-and-hour class-action lawsuits dropped slightly from 222 in 2013 to 213 in 2014 but the category remains above all others, according to Loss Insight.

The pie chart below demonstrates just how far wage-and-hour class-action lawsuits have come recently. Going as far back as the database allows, wage-and-hour cases make up about 10.6 percent of all class-action filings in Advisen Loss Insight.

So why the sharp increase recently? Lawsuits regarding payroll noncompliance have become easier to certify as a class compared with other categories, based on court precedents. Plus, changing work conditions from outsourcing and telecommuting, for instance, have made payroll noncompliance issues more prevalent.

The Department of Labor estimates that nearly 70 percent of employers are not in compliance with the Fair Labor Standards Act.

READ A ‘mushroom cloud of growth’ in wage and hour claims by Advisen’s Cate Chapman

Finally, Loss Insight has plotted total wage-and-hour cases against class-action litigation (below).

A report from Seyfarth Shaw said that in instances when defendants are able to defeat class certification, plaintiffs attorneys are more than willing to pursue litigation on behalf of individual claimants.

The risk has become so complex and the consequences of disobedience so costly that companies are hiring payroll compliance officers, sources said.