A recent report offers some ominous news for Texas employers. Texas is one of eight states that saw an increase in class-action wage-and-hour cases filed in state court last year, according to the Seyfarth Shaw law firm’s new Workplace Class Action Litigation Report.
Advice: Brace yourself for even more wage-and-hour litigation. Such cases typically increase during economic downturns—as the economic pie shrinks, workers step up efforts to get their share. These cases can get complicated. Have your attorney evaluate your overtime practices—and then make it a priority to implement any recommended changes.
The Seyfarth Shaw report also noted a marked increase in class-action suits filed by retirees—in particular, those who once worked for manufacturing companies that have had to cut retiree health benefits that were promised during good times. The study notes that six of the top 10 Employee Retirement Income Security Act (ERISA) class-action settlements “involve automotive and/or rust belt companies.”
According to the report, the ERISA claims fall into two categories: “stock drop” and “plan administration” suits. Stock-drop suits occur when company stock makes up a significant portion of a retirement plan’s portfolio; when the stock falls in value, so does the value of the retirement fund.
Plan-administration suits often claim retirement plans charge excessive fees or fail to manage investments properly.
The report also noted a strong correlation between mass layoffs and Age Discrimination in Employment Act charges. As layoffs increase, employers will likely face more litigation.
Note: Employers should evaluate their retirement plans to ensure they do not overly rely on company stock. Make sure employees and retirees are receiving balanced investment guidance that serves their interests, not yours.