Workers Fight Wage Theft Despite Fall in Class Actions

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Wage theft has been huge a topic in employee rights over the past year. But class action lawsuits addressing employment issues are falling and more employees must give up their right to file a lawsuit in court, according to a Wall Street Journal article published yesterday.

The number of employers requiring workers to sign arbitration agreements has more than doubled since the Supreme Court ruling in AT&T Mobility v. Concepcion approved them on a 5-4 decision. Only 16% of companies used arbitration clauses in 2012. That number has now grown to 43% last year according to the survey.

The validity of class action waivers is still in dispute as the Supreme Court has so far declined to address the issue. The National Labor Relations Board has twice ruled that class action waivers violate the National Labor Relations Act. Companies, on the other hand, feel increasingly confident that the Supreme Court will uphold their point of view.

The survey found that the increasing use of arbitration clauses and waivers of the right to bring a class action are decreasing the amount of lawsuits that are filed in court. Only 23 percent of class-action suits in 2014 addressed an employment law issue, down from 28% in 2011.

The publication of the survey comes at an interesting time. Employees actually seem to have been making inroads against employers with their push for higher minimum wages and opposition to wage theft outside of the courtroom. McDonald’s has just said it plans to increase wages on its company-owned stores (not including franchisees) to more than $1 above minimum wage. Walmart made a similar promise in February – it plans to raise its minimum pay to $10 an hour next year.

Seattle will start raising the minimum wage in the city to $15 an hour starting this month. Small employers must follow a seven year schedule of mandatory pay raises. Large employers have three to four years, depending on whether they pay toward an employee’s medical benefits plan, to reach the new higher minimum.  Los Angeles is also considering an increase in its minimum wage to $13.25 or $15.25 an hour.

The Secretary of Labor also promised additional efforts against employers committing wage theft, citing a UCLA study that $1 billion is lost by low-wage workers each year due to wage theft. Wage theft occurs when an employer withholds earnings or benefits required by state or federal law. This can include skipping mandated meal breaks, failing to pay overtime wages or otherwise failing to pay employees for money that is due to them.

In March, a Papa John’s pizza franchise in New York was ordered by a judge to pay more than $2 million as a result of their failure to pay delivery workers what they were owed. The lawsuit was filed by New York Attorney General Eric Schneiderman’s office.

The push by employers for these clauses in employment agreements stands in stark contrast to yesterday’s enforcement fine levied by the SEC against KBR for inhibiting the right of its workers to report potential violations of the law to the securities regulator.

Congress and the Department of Defense have also taken a stand against employment agreements prohibiting government contractors from reporting fraud, waste and abuse to the U.S. Government. The Cromnibus spending bill contains a requirement that no money from government spending in FY2015 go to companies with agreements that prohibit reporting of fraud, wast and abuse. The DoD now requires a certification by its contractors that they do not require employees or subcontractors to sign or comply with such agreements.

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