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Spike in workplace class-action lawsuits seen during the pandemic, report shows

Barbara DeMatteo, of Portnoy, Messinger, Pearl & Associates,

Barbara DeMatteo, of Portnoy, Messinger, Pearl & Associates, Inc., says whether employees are exempt or non-exempt from overtime can change based upon how their jobs have changed since the pandemic. Credit: PMP

The pandemic has produced a record number of workplace-related class-action rulings, according to a new report from a national law firm.

The pandemic spiked more class action lawsuits for all types of workplace issues, with 1,548 rulings in 2020, according to the Chicago-based Seyfarth Shaw LLP.

Of those rulings, the metropolitan area, which includes New York, New Jersey and Connecticut, had the most wage and hour lawsuits — which included claims that businesses failed to pay minimum wage or overtime for compensable work hours — than any other part of the country, totaling 40 cases processed and certified out of 113 filed nationwide.

"Metro-NY was the absolute epicenter of wage-and-hour class-action litigation," says Gerald Maatman, Jr., a partner at Seyfarth Shaw and author of its Workplace Class Action Litigation Report. (Long Island-specific data was unavailable.)

Termination, which was the top issue according to the report, was cited in 690 cases.

Maatman says, in general, the rise in litigation likely stems from

the fact that whenever there is a significant disruption in the economy and job loss there tends to be increased litigation that follows.

Among issues prompting lawsuits in the wage and hour space in the metro area were complaints from employees alleging they are working more than 40 hours and not getting paid the correct amount of overtime and those claiming they were misclassified as independent contractors and the work they performed entitled them to overtime, Maatman says.

He expects these kinds of claims to continue into 2021 since employees don’t necessarily file litigation the day they’re laid off, noting there’s usually some lag time.

Also noteworthy, the report says, is that "with a change from red to blue in the White House, a likely expansion of workers’ rights, increased regulation of businesses, and aggressive enforcement of workplace laws is apt to take place in the next four years."

Still, wage and hour litigation will remain prevalent in 2021, due to "a more friendly DOL that makes wage theft its enforcement priority and with minimum wage increases in 25 states in 2021," Seyfarth Shaw says.

Subsequently, it pays to look at how you’re classifying employees, says Yale Pollack, a partner at Ronkonkoma-based Campolo, Middleton & McCormick LLP.

"You may want to do an updated analysis of whether or not employees should be classified as exempt or nonexempt," he says.

Barbara DeMatteo, director of HR Consulting at Jericho-based Portnoy, Messinger, Pearl & Associates, Inc., agrees. Whether employees are exempt or nonexempt from overtime can change based upon how their jobs have changed since the pandemic.

For instance, she says, the status of an employee whose job pre-COVID was doing outside sales (as an exempt employee) could have changed to nonexempt because the employee is no longer "on the road making sales."

DeMatteo also finds that employers are getting into problems by not formally tracking the number of hours worked by nonexempt employees.

Doug Rowe, a partner at Certilman Balin Adler & Hyman in East Meadow, says he didn’t see a "record" number of claims being filed in 2020 locally, but definitely saw more claims than he did in 2019.

‘What I saw more glaringly was an increase in the difficulty with staying in compliance with all the new employment laws," he says.

He said employers should keep abreast of new laws including the NY Paid Sick Leave Law (see that went into effect Jan. 1 in addition to last year’s COVID-19 paid sick leave law.

Rowe also saw discrimination claims arising from terminations and layoffs due to COVID-19 (i.e., employees questioning why they weren’t permitted to work from home when other employees could or why they were laid off when another was not.)

Consider that COVID-19 lawsuits are also arising against businesses by those alleging that the business spread the coronavirus to their workers or customers through negligence, Rowe says.

Given that Republicans didn’t get pandemic-liability protections for businesses in the latest federal stimulus bill, businesses should "tread carefully in 2021 in ensuring that the safety and health of their employees and customers remain a priority," Rowe says.

Beyond that, employers should be mindful of potential claims that could arise from mandating employees to get the COVID vaccine, says Pollack, noting that the Equal Employment Opportunity Commission has issued guidance that employers should be aware of.

Some employees with disabilities or religious beliefs may be eligible for a reasonable accommodation, he says, adding, "this is going to be a potential new wave of litigation."

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Fast Fact:

The top 10 settlements in various employment-related class action categories totaled $1.58 billion in 2020, higher than the $1.34 billion in 2019, but lower than a high of $2.72 billion in 2017.

Source: Seyfarth Shaw

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