In 2009, employers faced a barrage of wage and hour class and collective actions.  2010 promises more of the same, plus increased enforcement by administrative agencies, including the Internal Revenue Service (“IRS”).

Taking a step in a new direction, in recent months, courts have demonstrated an increased willingness to grant class or collective action certification in Fair Labor Standards Act (“FLSA”) and/or state wage and hour claims.  This trend toward certification can be the difference in liability for underpaying a handful of individual employees versus an entire workforce.  When multiplied class-wide, liability for wage and hour violations adds up quickly.  Walmart, for example, agreed to pay up to $640 million last year to settle multiple wage and hour suits.

At the same time that employers are facing increased pressure from civil suits, state and federal agencies have stepped into a more prominent role in enforcing wage and hour laws.  Department of Labor (DOL) Secretary Hilda Solis recently announced that in early 2010, the DOL’s Wage and Hour Division will launch “We Can Help,” a national public awareness campaign to inform workers about their rights.  Secretary Solis has also hired an additional 250 wage and hour investigators to step-up enforcement efforts.  President Obama’s proposed 2011 budget would allocate $25 million to the DOL to combat employees misclassified as independent contractors.  The “Misclassification Initiative” provides for 100 additional enforcement personnel and would encourage state enforcement through grant money.  Even the IRS is participating, announcing that it will launch a three-year employment tax audit initiative, the “National Research Project.”  Like the DOL’s We Can Help initiative, the National Research Project will also focus on the misclassification of employees as independent contractors. 

Faced with triple threats from civil lawsuits, labor-focused administrative agencies, and the IRS, employers would be well-served by auditing their wage payment practices and workforce classification structure to ensure compliance with both federal and state wage and hour laws.