‘Disturbing’ FLSA trends include uptick in regular-rate litigation

Summary

Litigation over employers’ calculations of the Fair Labor Standards Act (FLSA) regular rate of pay is rising, according to employment counsel speaking at a National Employment Law Institute event. Plaintiffs are targeting common payroll errors — especially exclusion of certain bonuses and pay components — that reduce overtime pay calculations.

The trend started in states such as California and has spread into nationwide collective actions. Experts warn employers to audit regular-rate and hours-worked calculations now to avoid costly, large-scale claims.

Key Points

There is an uptick in lawsuits centred solely on incorrect regular-rate-of-pay calculations under the FLSA.
Common omissions include shift differentials, attendance, safety and retention bonuses, and some referral payments — items that may need to be included in the regular rate.
Plaintiffs’ lawyers favour these cases because they can produce large collective claims with relatively little initial work.
The One Big Beautiful Bill Act adds urgency: employers will soon need to identify qualified overtime, so now is a good time to audit pay calculations holistically.
Off-the-clock work remains risky — the 2nd U.S. Circuit’s Perry v. City of New York decision emphasises employers must pay for pre-shift tasks they require or should have known about, even if those tasks arise from unwritten policies.

Context and relevance

This story matters to payroll, HR and legal teams. As courts and plaintiffs broaden the scope of regular-rate challenges, errors that once drew limited attention can become multi-plaintiff or collective actions. The intersection with new tax-related reporting under recent legislation increases compliance complexity, making audits both timely and practical.

Why should I read this?

Short version: if you handle payroll or compliance, this is a ticking financial risk. These are ‘gotcha’ suits that can balloon into huge collective claims — and they’re easy pickings for plaintiffs’ firms. Read this so you can fix the likely problems before they turn into costly litigation.

Source

Source: https://www.hrdive.com/news/disturbing-flsa-trends-regular-rate-litigation/806679/