Recently, the Department of Labor’s Wage and Hour Division (“WHD”) announced that it had recovered more than $240 million dollars in back wages for more than 270,000 workers in 2014. Although this amount is slightly down from 2013’s $249 million recovery; since 2009 the WHD has recovered more than $1.3 billion in back wages for 1.5 million workers. The WHD attributes much of this success to its strategic enforcement initiatives that have targeted specific types of working relationships and industries.
As part of their strategic enforcement initiatives, the WHD has steadily increased the percentage of complaints it self-initiates – as opposed to complaints initiated by affected workers. In 2014, the WHD proactively initiated 43% of its investigation, compared to 35% five years ago. Of those agency-initiated investigations, the WHD finds liability for underpayment 78% of the time. The WHD has accomplished this success by targeting specific types of employers and industries that it believes will yield the highest rates of violations. Specifically, the WHD has targeted low-wage industries such as restaurants, construction, manufacturing, janitorial services and hotels. Additionally, the WHD has created a fissured industry initiative, focused on employers and industries more likely to use independent contractors, subcontractors, franchise relationships and employment agencies. The WHD has explicitly put a target on the backs of employers in these industries and with these types of work relationships. For example, on March 26, the WHD announced the recovery of $5.5 million in back wages for more than 1,100 low-wage gas station attendants from Shell, Exxon, BP and other gas stations. On April 9, the WHD announced the recovery of $1.3 million in back wages and damages on behalf of 1200 low-wage grocery workers. Employers in these targeted types of industries or with fissured work relationships should be vigilant in making sure their workplace is compliant with wage and hour laws.
Not to be outdone, the Equal Employment Opportunity Commission (“EEOC”) has also increased its involvement in systemic, class-like, enforcement. For 2014, the EEOC completed 260 systemic investigations, resulting in 78 settlements and conciliation agreements for a recovery of approximately $13 million. Additionally, in 2014 the EEOC filed 133 merit lawsuits, which included 17 systemic suits and 11 non-systemic class suits. By the end of the year, 14% of the EEOC’s docket consisted of non-systemic class suits and 25% consisted of systemic suits.
While an employer’s exposure to the EEOC is usually through a single plaintiff charge of discrimination, the EEOC has made a strategic efforts over the last few years to substantially increase its number of class based and systemic claims. Much like the plaintiff’s law firm down the street, the EEOC believes there is more money and exposure to be gained by focusing more resources to larger, systemic cases with the potential for larger payoffs. Just this month, the EEOC announced a partial settlement with a Sheet Metal Union for $12.7 million in back wages for a large class of Hispanic and African American employees. Employers should be careful to ensure they are in compliance with all anti-discrimination and wage and hour laws to ensure they are not the next target of the EEOC or DOL.