Do More Jobs and Stagnant Pay Spell Lawsuits?

Workers—secure about finding new jobs and angry about paychecks—are turning to courts

By Susan Milligan Jul 28, 2014
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The economic recession put workers in an unenviable position. They were asked to do more with less, were denied raises or cost-of-living increases, and felt so nervous about losing their jobs and not finding others that they kept quiet about t​heir paycheck frustrations. 

Now that the economy is in recovery—albeit a slow and uneven one—workers are fighting back in court, accusing their employers of violating anti-discrimination laws as well as wage and hour regulations.

From 2013 to 2014, lawsuits filed by disenchanted employees rose a startling 23 percentage points to 48 percent, according to a recent executive employer survey report by Littler, a San Francisco-based law firm specializing in employment and labor law. 

In addition, workers are feeling a bit more comfortable with their power in the job market, with 66 percent of unhappy employees feeling wary about finding work elsewhere, down from 85 percent in 2012, the study said. Just 44 percent cited underemployment as a concern, compared with 67 percent in 2012. And employers, while still cautious about the recovery, are ready to take on more staff, with 53 percent planning to hire more workers.

But if things are looking up, why are workers so disenchanted?

After a long economic downturn and high unemployment, workers are “beaten down,” said Judy Conti, federal advocacy coordinator for the National Employment Law Project, which advocates for workers’ rights. 

“During the recession, you didn’t, by and large, see the CEOs and executives taking pay cuts. Since we’ve recovered [economically], the CEOs are back where they were and then some,” she said. “The shareholders are doing fine, but wages have stagnated. That’s why people are unhappy.” 

From 2007 to 2012, wages fell for the bottom 70 percent of the wage distribution, despite productivity growth of 7.7 percent, according to a 2013 report by the Economic Policy Institute

Labor lawyer James Hermon agreed with Conti, and pointed out that some workers won’t be able to agitate for higher wages and better working conditions. 

Round after round of layoffs left remaining employees demoralized and, in many cases, performing work that previously was assigned to two or more employees,” said Hermon, a partner in Detroit-based Dykema’s labor and employment practice group. “In addition, wages have remained flat for years and benefits have been cut, so employees are doing more work for less compensation,” he said. “It is hardly surprising employees are unhappy under those circumstances.”

Although the national unemployment rate dropped from double digits in 2009 to 6.1 percent in June, wages are not likely to increase for everyone, Hermon said. “For unskilled employees this likely will be the new normal. Competition for unskilled labor jobs will remain high, both from the domestic labor force and overseas, resulting in depressed wages and benefits.” 

The lawsuits are not necessarily meritorious, but rather a way for employees to fight back when they feel they have been mistreated in some way, whether or not mistreatment actually happened, said Barry Hartstein, co-chair of Littler’s equal employment opportunity and diversity practice. 

“I think the problem you see is frustration. Sometimes the individual will take the view, ‘I’m not getting hired, and it can’t be because of me. It must be some other factor. It must be discrimination,’ ” he said. 

Less than 5 percent of cases filed with the U.S. Equal Employment Opportunity Commission (EEOC) are found to have cause, Hartstein said. Yet that doesn’t stop people from filing suits.

“People see other cases where there are big payouts and think, ‘Why not me?’ ” he said. “There’s a lotto mentality out there.”

Conti said employers can find other ways to make workers feel valued without raising pay, perhaps by offering flexible work schedules. 

But frustration over wages, combined with the lowering unemployment rate, will likely convince more employees to go to court, said Kelly Kolb, a labor and employment attorney with Buchanan Ingersoll's Fort Lauderdale, Fla., office. “Folks are feeling more comfortable about raising hell about working conditions,” Kolb said. “They feel they can find another job.”

Susan Milligan is a freelance writer based in Washington, D.C.

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