The President’s recent directive to revise the federal wage-hour regulations includes a directive to simplify these rules. This simplicity mandate ties in to a recent Government Accountability Office (GAO) study analyzing the year-over-year increase in FLSA litigation. The GAO study found that a decrease in DOL guidance regarding the law and a failure by DOL to analyze where systemic problems and employer confusion were arising, along with “attorneys’ increased willingness to take on such cases [on behalf of workers],” contributed to the high volume of litigation, which reached 8,148 FLSA suits in calendar 2012. This figure of course reflects only federally filed actions brought under the FLSA, and does not address claims asserted solely under state law, such as the innumerable actions filed in New York challenging service charge practices in the years since the New York Court of Appeals’ World Yacht decision, or the prevalence in California’s active litigation forum of cases venued in that state’s courts. Wage litigation is widespread, and employer confusion regarding exempt status and other key issues is one crux of the problem.
A preventive approach to risk management, including review of pay practices and assessment of risk management tools such as class and collective action waivers, remains essential to protecting businesses and minimizing risk.