What could Trump’s agenda mean for wage-related lawsuits?

Ralph Talarico makes a living caring for people who can’t care for themselves. He bathes his disabled clients, feeds them and makes sure they take their medication.

In a given week, the 59-year-old grandfather from Lancaster County might work 60 hours with one client, six hours with another then be on-call for emergencies that might arise for two others.

But his employer, Public Partnerships LLC, still owes him and some of his more than 10,000 colleagues money for unpaid overtime, according to a proposed class action lawsuit filed last month in Pennsylvania’s Eastern District.

Headlines about these kinds of “wage theft” lawsuits show up relatively frequently throughout the country. Utz Quality Foods, PNC Bank and Friendly’s are among the many companies to face such allegations, according to lawsuits filed over the past several years.

President Donald Trump has broadly signaled throughout his first few months in office that he hopes to cut back regulations that he feels limit businesses’ ability to operate and turn a profit. Some employment law attorneys, however, are still unsure whether or to what extent the proposed cuts would affect employees’ ability to seek compensation for alleged labor law violations.

“I haven’t seen changes to the regulations yet,” said Christine Webber, a partner at Cohen Milstein Sellers & Toll, a Washington, D.C.-based firm representing Talarico. “What I wonder is if the new Department of Labor under the new administration will be as active in enforcing the rules that are already on the books.”

Uncertainty under Trump

Employee advocates have long called for crackdowns on companies that don’t pay their people for hours worked.

The term “wage theft” informally refers to allegations of unpaid overtime, forced off-the-clock work and minimum-wage violations that go against state or federal labor laws. Webber has seen low-wage workers, especially in the home care and restaurant industries, most frequently fall victim to these types of actions, but the issue can touch all sectors of the economy.

“It’s pretty persistent as a problem,” Webber said. “I think that it’s unfortunate that employers will see trimming their overtime expense, or even in some cases their minimum wage expenses, as a way to cut corners.”

This sentiment that violations are common, however, is far from universal. Even the term “wage theft” is controversial, with some attorneys calling it an exaggerative phrase describing a problem more frequently linked to honest mistakes than blatant “theft.”

Exact statistics on the frequency of wage violations are hard to pin down, but employee-representing attorneys anecdotally reported an uptick in so-called wage theft cases in the first few years after the 2008 recession. Laid-off workers felt emboldened to sue their former employers without fear of repercussions, Webber said, and, in more egregious cases, cash-crunched companies may have looked for ways to cut costs.

This reported increase seems to have subsided as the economy improved. The U.S. Department of Labor has reported a steady decline in overtime violations every year since 2012. The number of private lawsuits alleging federal labor law violations also seemed to be on the decline last year after reaching a peak in 2015, according to data gathered by Seyfarth Shaw LLP, a Chicago-based law firm.

People like Talarico who believe their employers owe them money for time worked frequently turn to private litigators to go after that pay, which often leads to class-action suits against private companies. Federal and state labor departments also have authority to pursue alleged wage violators.

How these types of cases will play out under the Trump administration remains unclear.

During his campaign and continuing into the early days of his presidency, Trump has repeatedly vowed to roll back regulations that limit business growth. The targets so far have included the bank-regulating Dodd-Frank Act, the investor-regulating “fiduciary rule” and a sweeping range of environmental regulations.

An Obama-era proposal to raise the salary threshold under which companies must pay their employees for overtime work has also stalled under Trump after a nationwide court injunction.

Still, Trump has not indicated any intention of loosening wage laws in favor of employers. Michael King, a partner with York-based Stock and Leader, does not expect him to do so any time soon.

“The law’s the law. The cases that are out there are out there,” said King, who represents employers in labor law cases.

While Trump might not change the laws, King and Webber both suspect the president and his Department of Labor, headed by attorney R. Alexander Acosta, are unlikely to pursue wage-law violators as aggressively as past administrations.

If that prediction proves true, victims may continue turning to private litigation.

“To the extent that the Department of Labor doesn’t pursue cases, that’s more that can come to us,” Webber said.

Complicated laws

Wage theft violations do not arise too frequently among King’s clients. The local businesses he works with more often seek help protecting themselves against allegations related to issues like discrimination and unlawful firing.

In cases when unpaid wage-related allegations do surface, King believes it is not because the company is trying to cut corners.

“With our practice, these types of issues that we get into almost always involve issues of interpretation,” he said. “I see a lot more honest mistakes or confusion or inattention to detail (than deliberate violations).”

Labor laws do include some potentially confusing nuances.

Employers, for example, often inadvertently misclassify overtime-eligible employees as independent contractors, King said. Utz Quality Foods recently paid $2.5 million to settle a suit alleging that it had done just that with some of its route salespeople.

King recognizes that some companies probably do intentionally thwart the law. But he also suspects that some wage-related allegations result not from actual theft but rather disgruntled employees trying to get back at an employer.

“The bad behavior goes both ways,” he said.

Overtime laws also include caveats for certain kinds of workers, including ones classified as providing companionship care, Webber said. That exemption, she contends, refers more to people like babysitters hired by individuals than it does to people like Talarico — and she thinks his employer, Public Partnerships LLC, knows that. The company changed its policies to allow overtime pay in 2016 but still did not fully reimburse employees for all the hours they worked before that time, while also failing to fully compensate employees for time they worked after the policy change, Talarico’s suit alleges.

Public Partnerships did not respond to a request from the Central Penn Business Journal for comment.

Webber does not see the case as hairy, complicated or the result of a misunderstanding. To her, it is a too-common example of a type of a business taking advantage of a personal care employees’ dedication to their work.

“The employers are in part trying to prey on the sympathy their employees have for their clients,” she said.

Jennifer Wentz
Jennifer Wentz covers Lancaster County, York County, financial services, taxation and legal services. Have a tip or question for her? Email her at jwentz@cpbj.com.

Business Events

2019 Top 50 Fastest Growing Companies

Monday, September 09, 2019
2019 Top 50 Fastest Growing Companies

2019 Crisis Management Symposium

Thursday, September 26, 2019
2019 Crisis Management Symposium

2019 Forty Under 40

Monday, October 07, 2019
2019 Forty Under 40