NERA Economic Consulting has compiled an annual report on trends in wage and hour settlements since 2007. The latest report offers an update on wage and hour settlement trends for 2015 with the addition of 27 months of civil wage and hour data.
NERA defines wage and hour litigation as “current and/or former employees allege unpaid work, including unpaid overtime, failure to provide meals and/or rest breaks, and off-the-clock work. Cases may be brought under state law or under the Federal Fair Labor Standards Act (FLSA). These cases may result in civil settlements or verdicts, as well as in back wages and penalties levied by the Department of Labor (DOL).”
Through their 8 month analysis, they found 613 settlements with a total of $3.6 billion in wage and hour settlement payments.
Key Wage and Hour Settlement Trends
- Average settlement values were lower in 2014 than in prior years. In 2014, companies paid $5.3 million to settle a case, which was lower than the $6.3 million average in 2013 and overall average of $6.9 million during the 2007-2015 period. The lower settlement pattern continued into the beginning months of 2015, where average settlement amounts were down to $2.8 million.
- The median settlement values were lower in 2014 than previous years. In 2014, a company’s median payment was $2.4 million to settle a case, which was lower than the $3 million median in 2013 but higher than the $2.2 million during the 2007-2015 period. The lower settlement median was even lower for the months of 2015 at only $1.9 million.
- The most common allegation causing wage and hour lawsuits remains overtime violations. Historically, overtime violations have always been the cause of most wage and hour lawsuits and this trend remained steady over the last 15 months. There was also an increase in the amount of cases caused by minimum wage violations in 2014 and 2015 relative to years prior.
- The food and food services industry had an increase in the proportion of settlement dollars spent. In general, the number of settlements vary by industry. Over 2014 and 2015 the food and food services industry had the most increased proportion of settlement dollars relative to prior years.
- 60% of companies that had a wage and hour settlement between 2007 and 2015 had also been investigated by the DOL’s Wage and Hour Compliance division. Over the last nine years, the DOL reported thousands of investigations. 75% percent of those resulted in a determination of a violation.
Protect yourself against wage and hour lawsuits, especially, overtime violations. To see how EPAY can help your business avoid costly settlements, set up a demonstration today.
Source: http://www.nera.com/content/dam/nera/publications/2015/PUB_Wage_and_Hour_Settlements_0715.pdf