Wage and Hour Class Action Lawsuits

Employees pursue claims of state and federal employment law violations through wage and hour class action lawsuits when they believe they have been denied rest breaks or not provided the required minimum wage or overtime pay.

Class action lawsuits can result in hefty payouts for employers. A report from law firm Duane Morris LLP notes that the top 10 wage and hour class action lawsuit settlements in 2022 amounted to approximately $575 million.

Wage and hour litigation can include a surprising range of workers. Professional athletes aren't immune to employment law claims. A significant portion of the 2022 total came from a $185 million agreement between Major League Baseball and minor league baseball players. The ballplayers said MLB violated state and federal employment laws, including minimum wage and overtime pay requirements.

Wage and hour class actions are often settled to avoid massive judgments.

See FindLaw's Wage and Hour Laws section for related articles and resources.

Why Workers Pursue Class Action Lawsuits

Employers that violate employment laws often do so to many employees at once, not just to a single individual. A class action lawsuit allows workers who have suffered similar harm to come together and pursue their claims in a single court action.

Suits brought under the federal Fair Labor Standards Act (FLSA) are among the most common types of workplace class action litigation. Client service associates at brokerage firm Morgan Stanley alleged they were denied overtime wages. Three plaintiffs brought a class action suit on behalf of over 800 employees. The lawsuit resulted in a $2.4 million settlement. Individually, their claims to back pay would have been too small to justify the cost of a lawsuit.

Courts approved more class-action certifications in FLSA cases than in any other type of case in 2022, according to Duane Morris.

A class action allows plaintiffs to join together to pursue recovery. Workers often have to do little more than opt-in or sign up for the class action lawsuit.

One category of workers — independent contractors — rarely come together in class action litigation. Most labor and employment laws, including wage and hour issues, do not apply to non-employees.

Common Wage and Hour Class Action Lawsuit Claims

Many wage and hour class action lawsuits allege employers violated the FLSA. The federal law establishes:

• Minimum wage requirements
• Overtime pay requirements for employees who work more than 40 hours in a workweek
• Employee classification for minimum wage and overtime pay requirements

Class action suits often allege violations of these federal law requirements.

Many wage and hour cases proceed in federal court, but often involve claims under state law. The class action lawsuits often feature workers alleging violations of state minimum wage and overtime pay laws.

For example, wage and hour class action lawsuits are common in California. Golden State law provides for a higher minimum wage than federal law. It also mandates breaks and requires overtime pay when some employees work more than eight hours a workday, not just 40 hours a week. Based on these state requirements, workers at Hooters franchises in California filed class action lawsuits alleging:

• They were not given their share of tips
• They were not provided breaks
• They were not paid properly for promotional work

Collective action suits dealing with state wage claims can be expensive for employers. Delta paid $3.5 million in 2019 to settle class allegations that it incorrectly calculated overtime pay under California law for some of its nonexempt employees.

New York is also known for its strong enforcement of wage and hour requirements.

Forming Wage and Hour Class Actions

Wage and hour cases are often brought by the U.S. Department of Labor (DOL) or a private individual. DOL's Wage and Hour Division investigates wage and hour claims.

The FLSA outlines the process for creating a class action, called a collective action, over claims of wage and hour violations. The steps are different from typical class actions.

Under the FLSA, an employee who alleges wage and hour violations must first determine whether other current or former employees are similarly situated. If the employee requests collective action status, a court will probably grant conditional certification. Once they obtain class certification, plaintiffs send a notice to potential class members, who must choose to opt into the lawsuit.

Courts help this process. They often require companies to post notice and opt-in forms at work sites. They also require companies to provide contact information for their employees.

Types of Relief

Since wage and hour class actions often revolve around allegations of unpaid wages, the most common form of relief is payment for back wages. The FLSA also permits recovery of double back pay by allowing damages equal to the unpaid wages owed. Injunctive relief, such as changing company policy, may also result.

Many companies chose to settle wage and hour class action lawsuits rather than risk losing millions of dollars at trial. For example, in 2008, Wal-Mart settled over 60 wage and hour lawsuits for $640 million. The cases alleged unpaid off-the-clock work, lack of rest periods, and other violations. The settlement followed a series of court losses, including a $172 million jury verdict for failing to provide meal breaks in California and a $188 million verdict for requiring off-the-clock work in Pennsylvania.

When a settlement or final judgment occurs, attorneys' fees are deducted. The remainder is then divided among the members of the class action.

Arbitration Agreements

Arbitration agreements between employers and employees limit the ability of workers to bring class actions. Many employers favor arbitration agreements in employment contracts. The alternative method of dispute resolution keeps matters private. Lawsuits are public record, but arbitration is not. 

The U.S. Supreme Court upheld arbitration clauses that limit worker's ability to bring class action lawsuits in 2018. As a result, arbitration agreements often force employees into individual arbitration proceedings instead of allowing them to band together in a class action lawsuit.

How a Lawyer Can Help

An employment attorney can help employers and employees determine whether state or federal employment and labor law has been violated and whether class action litigation is appropriate. If you are concerned about employee misclassification, off-the-clock work, unpaid overtime, or other wage and hour violations, consider contacting a qualified employment law attorney to discuss your situation.