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Plaintiffs’ lawyers have breathed new life into the Fair Labor Standards Act, the Depression-era law designed to ensure that even those with menial jobs are paid a minimum wage. Proof of the law’s renewed vigor can be found in federal court dockets, where the number of lawsuits claiming violations of the act jumped by nearly a quarter from 1998 to 2000. What may be equally important, employment lawyers said, is that many plaintiffs have begun to litigate similar claims under wage and hour laws in state courts, where it is often easier to bring class actions. Although state court statistics are not available, the lawyers agreed that there has been a surge recently, highlighted by a California jury’s verdict in July ordering Farmers Insurance Exchange to pay its claims adjusters $90 million in underpaid wages. The judgment, which could exceed $130 million with interest and attorney fees, commanded the attention of lawyers and industry analysts. “This verdict is a wake-up call for all California employers,” opined the California Employment Law Letter, a newsletter that advises employers of current trends. “Studies have shown that the majority of U.S. employers are out of compliance with the wage and hour laws.” The newsletter also reported that in June, Rite Aid Corp. paid $25 million to settle another class action. Last year, Albertson’s paid $37 million to settle a suit brought by thousands of employees who claimed they were forced to work “off the clock.” In October, BCI Coca-Cola Bottling Co. and Bank of America settled similar class actions in California courts for $20.2 million and $22 million, respectively. Employment attorneys around the country also report these pending cases: A New York lawyer is litigating cases on behalf of deliverymen for A&P and Gristede’s grocery stores and Duane Reade drug stores; garment workers employed by Donna Karan; and employees of New York Apple Tours and Wal-Mart. A Texas attorney has brought claims against 11 offshore drilling companies and the Aon Insurance Co. A California lawyer sued, under state law, OfficeMax, Food4Less and AAA Automobile Club of Southern California. A Washington, D.C., lawyer is defending claims against Ameritech, Wal-Mart, and the May Department Store Co. According to the Administrative Office of the U.S. Courts, the number of suits under the Fair Labor Standards Act increased from 1,562 to 1,935 between 1998 and 2000. “To some extent, it has been a new frontier,” said David Borgen, a plaintiffs’ lawyer at Oakland, Calif.’s Saperstein, Goldstein, Demchak & Baller and co-chair of the American Bar Association’s Fair Labor Standards Act Subcommittee. Most workers know they can’t be discriminated against, he said, but they have been slow to learn that it is also illegal for a company to call them managers, when they don’t manage, in order to avoid paying overtime. The plaintiffs’ bar has also been slow to grasp the opportunity, although the federal law has existed since 1938 and many state laws also are well-established. Plaintiffs’ lawyers said individual cases are rarely economically feasible. Taken together, they may be lucrative indeed, but the federal law doesn’t allow class actions. Whereas in class actions all parties of the certified class are included in the suit unless they opt out, the labor act provides for only “collective actions” in which each plaintiff must opt in. Few lawyers were willing to embrace what they perceived as labor-intensive propositions with uncertain returns. THE TIDE TURNS What changed? The Clinton administration championed increased enforcement of labor laws, Borgen said, which raised awareness among employees and their advocates. The U.S. Department of Labor also released regular reports assessing compliance with the wage laws, and the rates in many industries were very low. The opportunity for litigation was facilitated by provisions in the federal statute that encourage courts to assist plaintiffs in joining claims of co-workers. In recent years, plaintiffs’ lawyers have been further aided by labor unions. Joseph Tilson, a defense lawyer at Chicago’s Meckler Bulger & Tilson, cited the United Food and Commercial Workers Union as particularly effective in this area, organizing workers and referring them to lawyers. Spokesman Greg Denier acknowledged that his union, with 1.4 million members, has taken an active role in lawsuits against companies including Albertson’s, Tyson Foods, Perdue Farms and Nordstrom. Once lawyers began suing and companies began settling for substantial amounts, word spread rapidly through news coverage and seminars organized by the ABA and the National Employment Lawyers Association. It wasn’t long before lawyers in some states recognized the advantage of bringing class actions under state wage and hour laws. One of the first lawyers to do so was Steven Zieff, who won the $90 million verdict against Farmers. A partner at San Francisco’s Rudy, Exelrod & Zieff, he wasn’t aware of other class actions when he filed his first case, in 1992, but it seemed only natural. “Employers treat the employees as a class,” Zieff said, “so these cases scream for class actions.” For Robert Davis, a lawyer in the Washington, D.C., office of Chicago’s Mayer, Brown & Platt who is defending companies in about 30 wage cases around the country, most in state courts, class certification is where the battle begins. “Plaintiffs are making assertions about what happened to them individually, such as whether they were required by a particular manager to work off the clock,” Davis said. “Many courts have ruled that a multiplicity of claims like this cannot pass muster for a class action.” Over the past two years, he has prevented plaintiffs from achieving certification in three cases and negotiated settlements in another seven after persuading plaintiffs their classes were unlikely to be certified, he added. Plaintiffs’ lawyer Borgen sees the battle line differently. For him, it’s the use of the administrative exemption: “That’s where the rubber meets the road. That’s where you’re going to see litigation.” His firm filed its first wage case in 1997, the firm’s only one that year. Now the firm handles a half-dozen or more annually, with settlements ranging from $1 million to $12 million. “The law has been available for decades, but it had been dormant,” he said. It is dormant no longer.

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