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NERA Economic Consulting Releases Wage and Hour Settlements Trends Report

13 March 2013

New York -- Wage and hour settlements for US companies totaled $467 million in 2012, largely in line with previous years, according to NERA Economic Consulting's Trends in Wage and Hour Settlements: 2012 Update, released today.

The annual study analyzes cases involving allegations of current and/or former employees' unpaid work, including unpaid overtime, failure to provide meals and/or rest breaks, and off-the-clock work. NERA Trends authors have compiled a proprietary database of all wage and hour settlements identified between 1 January 2007 and 31 December 2012.

For 2012, 102 wage and hour cases were settled compared to the 107 settled in 2011. On average companies paid $4.8 million to resolve a case last year, up slightly from the $4.6 million identified in 2011. The median settlement value for wage and hour cases was $1.7 million in 2012, only slightly higher than the $1.6 million median observed in 2011. Trends authors found a decrease in the average settlement value per plaintiff per class year-the average for 2012 was $1,300 versus the $1,500 observed in 2011.

Notably, an increase in settlements involving allegations of minimum wage and overtime violations was observed in 2012, relative to prior years. The healthcare service industry also paid a larger proportion of settlement dollars compared to previous years-27% in 2012 compared to 4% over the prior five-year period.
 
Trends authors for the 2012 study compared NERA's wage and hour settlement data to concluded actions taken by the Department of Labor's (DOL's) Wage and Hour Compliance Division over the prior six-year period. NERA found that 58% of companies with a wage and hour settlement between 2007 and 2012 had also been investigated by the DOL's Wage and Hour Compliance Division. In addition, 28% of companies in NERA's wage and hour settlement database were found by the DOL to have an FLSA violation, with back wages associated with these violations totaling $18.8 million.

Additional Trends in Wage and Hour Settlements

  • Over the 2007-2012 period, aggregate wage and hour settlement payments were $2.7 billion.
  • 446 wage and hour cases were settled over the prior six-year period.
  • Cases with extremely large classes, 10,000 plaintiffs or more, have been decreasing over the past five years. Only 5% of settlements in 2012 were for such cases.
  • The average duration of a class period for wage and hour cases in NERA's database in five years.
  • 60% of wage and hour cases in our database involve at least two allegations. Approximately 15% of the cases have an allegation of overtime only, while another 56% of cases include an allegation of overtime in addition to one or more allegations.

Trends in Wage and Hour Settlements: 2012 Update is authored by Dr. Denise Martin, Chair of NERA's Employment and Labor Practice, Dr. Stephanie Plancich, Vice President, and Janeen McIntosh, Senior Analyst. The study may be downloaded from: http://www.nera.com/publications/archive/2013/trends-in-wage-and-hour-settlements-2012-update.html

About NERA

NERA Economic Consulting (www.nera.com) is a global firm of experts dedicated to applying economic, finance, and quantitative principles to complex business and legal challenges. For more than six decades, we have been creating strategies, studies, reports, expert testimony, and policy recommendations for government authorities and the world’s leading law firms and corporations. We bring academic rigor, objectivity, and real-world industry experience to issues arising from competition, regulation, public policy, strategy, finance, and litigation.

NERA’s clients value our ability to apply and communicate state-of-the-art approaches clearly and convincingly, our commitment to deliver unbiased findings, and our reputation for quality and independence. Our clients rely on the integrity and skills of our unparalleled team of economists and other experts backed by the resources and reliability of one of the world’s largest economic consultancies. Continuing our legacy as the first international economic consultancy, NERA serves clients from major cities across North America, Europe, and Asia Pacific.