WASHINGTON, September 23, 2013 —Over the last decade, wage lawsuit filings in the United States have exploded. The Federal Judicial Center says that wage-and-hour lawsuit filings jumped ten percent in the past year. Going back ten years, such lawsuits have increased in excess of 400 percent.
Recently, former strippers filed a $10 million class action lawsuit against three Manhattan strip clubs, alleging they had been misclassified as independent contractors. The money these women earned came solely from tips. They claim, however, that they were employees, also entitled to at least minimum wage pay from the clubs.
These ladies needed the money for their costumes. Seriously.
An almost identical lawsuit ended successfully for another group of NY strippers a few weeks ago.
Madison Square Garden is being sued for refusing to pay individuals they claim were interns or “student associates.” The college student plaintiffs contend they were employees.
iPhone maker Apple is now being sued over wage issues. Some Apple stores made their employees stand in line for up to 30 minutes every shift and wait for a manager to search their bags. The wait time was deducted from the employees’ pay.
Can you hear me now?
A lawsuit against Russell Stover Candies by some of their sales representatives claims that they were employees and entitled to overtime pay.
Bank of America, Walmart and Taco Bell all faced lawsuits that alleged they owed employees money.
Short of lawsuits, fast-food workers in 60 U.S. cities last month went on strike, protesting outside of McDonald’s, Burger King and other establishments in an effort to move these employers to give them a “living wage.”
More fries, please.
Numerous theories have been advanced for the current, heightened level of wage discontent:
- The national economic downturn.
- Lack of rule enforcement from the Department of Labor, where fewer enforcement resources mean employers can get away with more. With little to no enforcement, employers have become emboldened and violations have increased.
- Worker classifications. Employers often misclassify a worker. This can exempt them from paying overtime. Labeling an employee as a professional or as someone working “on salary” provides employers the basis to deny overtime.
- Social media communications that have educated individuals about their rights.
- Lawyers who see an opportunity for a new class of clients. (Had to include this, clearly not true.)
The Fair Labor Standards Act of 1938 established standards for work rules and pay. The Act established a work day as 8 hours and a work week as 40 hours. It required payment of minimum wage. Rules were established identifying “classes” of workers and detailing who should or should not get over time pay.
The Act has been updated and modified over time to address the changing world of employer-employee realities. By way of example, artists, online workers, and IT jobs often do not fit the older rules. The problem that exists, however, is that there are too often gray areas in the law and there are no clear precedents for resolving them.
The “fairness” discussion continues.
Enter the very divisive topic of minimum wage. The current federal minimum wage is $7.25 per hour. According to the U.S. Department of Labor, in January, 2013, four states had minimum wages lower than the federal minimum (Wyoming, Minnesota, Arkansas and Georgia), and five states had no minimum wage at all (Louisiana, Mississippi, Alabama, Tennessee and South Carolina).
In his February, 2013 State of the Union address, President Obama included a plea for and extensive argument in favor of an increase in the Federal minimum wage, to $9.00 per hour. Obama said:
“It could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead. For businesses across the country, it would mean customers with more money in their pockets.”
Opponents, mostly Republicans and business lobbies, criticized the move as being a job-killer in a fragile economy.
Paul Sonn, of the National Employment Law Project, as quoted in “The Fiscal Times” (September 19, 2013), says “job creation and profitability at companies that employ low-wage workers have continued to grow even when the minimum wage has increased. An analysis of corporate data last July showed 75 percent of the largest employers of minimum or near minimum wage workers had higher revenues after the recession (2011 or 2012, depending on when the company’s fiscal year ended) than before (2007 or 2008). That period also coincided with two minimum wage increases in July 2008 and in July 2009, to the current $7.25 an hour.
From The Bureau of Labor Statistics, the current federal minimum wage is not worth nearly as much as it was decades ago. Stated another way, purchasing power is less than it was. To keep up with inflation since 1968, the 2013 hourly rate would need to be $10.40. The purchasing power equivalent would be $9.92/hour.
Locally, the Washington, D.C. City Council recently nixed an initiative for a higher minimum wage for “big-box” stores located in the District. The minimum wage in D.C. is $8.25/hour; the council wanted big employers to pay $12.50. Walmart, scheduled to come to D.C. with six new stores, threatened not to come if that initiative was made law. Now, one D.C. Councilmember is considering a bill that would raise the minimum wage to $10.25/hour. Neither bump would affect Sam Walton’s billionaire heirs.
On the left coast, California this week passed legislation that will raise its minimum wage to $10.00/hour by 2016.
Lawsuits, strikes, Federal and state and local jurisdiction votes on minimum wages all roll into one clear, bottom line proposition: American worders are not making enough money. But the officials we vote for and the organizations we work for continue to resist paying us more even as they increase their own take.
It is absolutely and historically clear that incremental wage increases and paying employees fairly strengthens the economy, improves worker morale and employee retention and stimulates business itself. When employees quit, file lawsuits, or strike, everyone loses.
Ours is still a world of abundance. It is a shame that those who fully partake of that abundance seek to ignore those who are struggling, cynically isolating them in a world of scarcity.
Paul A. Samakow is an attorney licensed in Maryland and Virginia, and has been practicing since 1980. He represents injury victims and routinely battles insurance companies and big businesses that will not accept full responsibility for the harms and losses they cause. He can be reached at any time by calling 1-866-SAMAKOW (1-866-726-2569), via email, or through his website. He is also available to speak to your group on numerous legal topics. Paul is the featured legal analyst on the Washington Times Radio, in Washington, D.C., on the Andy Parks show and he is a columnist on the Washington Times Communities.
His book The 8 Critical Things Your Auto Accident Attorney Won’t Tell You is free to Maryland and Virginia residents and can be obtained by ordering it on his website; others can obtain it on Amazon.
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