Wage and hour litigation driving business at Texas law firms
What do you get when you combine an innovative and aggressive plaintiff’s bar with sloppy business practices, corner-cutting by contractors and failure to properly compensate day laborers?
A thriving labor and employment law practice in the Lone Star state.
Wage and hour litigation in Texas — and especially in Houston — has been in hyperdrive for the past six years and shows no sign of slowing down anytime soon. That is great news for law firms that defend corporate clients.
There were 692 new lawsuits filed in Texas federal courts under the Fair Labor Standards Act during the first nine months of 2018, according to new data from Androvett Legal Media and provided exclusively to The Texas Lawbook.
The 692 new wage and hour complaints is 10 percent more than were filed during the first nine months of 2018, up 50 percent from 2012 and are nearly triple the number of such cases a decade ago.
The Androvett statistics show that more than 900 new FLSA lawsuits have been lodged in Texas each year for the past six years - up from 350 in 2008.
“It doesn’t look like there’s any slowing down for a while,” said Rachel Powitzky Steely, a partner in Foley Gardere’s Houston office who serves as vice chair of the firm’s labor and employment practice.
The U.S. District Court in the Southern District of Texas, which includes Houston and Galveston, is far and away the wage and hour litigation capital of Texas. In fact, there were as many new FLSA cases filed in the Southern District during the third quarter of 2018 as the other three districts in Texas combined.
There were 334 wage and hour lawsuits filed in the Southern District between January and October 2018, according to the Androvett data - a 23 percent increase from the same time period in 2017 and double the 162 FLSA cases brought during the first nine months of 2018 in the Northern District of Texas, which includes Dallas and Fort Worth.
The Western District of Texas, which runs from Austin to El Paso, has also been a hotbed for wage and hour litigation. The Androvett data shows that 138 FLSA cases were filed in the WDTX during the first three quarters of 2018, which is more than triple the number of such lawsuits lodged during the same period in 2008.
The Western and Southern districts, of course, have one common denominator: oil and gas.
For example, hundreds of lawsuits have been filed in those jurisdictions during the past few years in cases where when oil and gas project leaders instructed workers and truck drivers to arrive at the work site at specific times but then do not put them to work until a couple hours later.
Some businesses declined to pay employees for the time between their arrival at the workplace and when the company actually had them start working. Judges have uniformly ruled this practice is a clear FLSA violation and such cases have become slam-dunk wins for plaintiff’s lawyers.
FLSA litigation spiked and hit record highs in 2015 when commodity prices plummeted and energy companies conducted mass layoffs in the oil patch.
Wage and hour lawsuits have declined as the price of oil and gas has improved and exploration and production companies have gotten busier — especially in the Permian Basin.
“The Permian is the hottest place in the country - if not the world - right now,” Steely said. “I have seen cases that have started and stopped in which … plaintiffs just drop the case. They don’t want to pursue it anymore or are not interested in fighting it because they know the market’s hot right now and they can make a pretty good wage and not have to mess with (a wage and hour lawsuit) and have it hanging over their head.”
Due to the current FLSA environment, Winstead labor and employment shareholder John Linker said it is critical that human resources departments remain proactive and “continue to do their due diligence and conduct internal audits” to make sure they are “maintaining the appropriate and lawful pay practices” and that “people are properly classified as exempt and not exempt.
“Now’s the time to address changes if they need to be made, or at least get a realistic assessment of your potential exposure before (a lawsuit is filed) and make a strategic decision based on that. … You don’t want to wait until you get served with a lawsuit,” Linker said.
For a longer version of this article, please visit TexasLawbook.net.