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Lawyers feast on wage law violations

It's an old law. But you'd think it was new the way workers are using it these days.

Last year workers, using the 1938 federal Fair Labor Standards Act, filed 168 wage complaints in federal court in Houston, five times more than they filed in 2001, according to an analysis by law firm Seyfarth Shaw.

Most of the complaints concern overtime pay that wasn't paid, calculated properly or involved work off the clock. A few were about minimum wage.

"The cases are very attractive to the plaintiff's bar," said John Collins, an employment lawyer at Seyfarth Shaw who defends companies accused of violations. "When they dig down deep enough, companies are often doing something wrong."

It's not because they're run by evil people, Collins said, but because wage-and-hour regulations are fairly dense. Finding violations is sort of like spearing fish in a barrel.

And then there are the rewards for lawyers looking to score some big hits. Winning a wage-and-hour claim is much easier than other kinds of employment cases, such as race or sex discrimination.

You don't have to worry about proving illegal motivation, Collins said. Liability is often clear: If the wages are due, employees get paid.

And the payouts can be far greater because judges often rule that other employees can join the case. Back pay usually is doubled and attorney fees often are tacked on separately so employees don't have to foot the legal bills.

Though Houston area employees and their lawyers are filing a record number of suits, the Labor Department is doing less.

Between 2001 and 2005, the wage-and-hour division of the Labor Department collected the most money in 2003, when it got $213-million in back wages for workers nationwide, according to the government's own research.

By 2005, the government agency collected $166-million, which is even less than what it got in 2002.

The trend is the same when tracking the number of employees who received back wages. The number peaked in 2003 when 342,000 employees got paid. But two years later, 241,000 employees collected back wages.

The Labor Department doesn't seem to be as aggressive as the employment lawyers who are suing, Collins said. And it's long been underfunded and understaffed.

Lawyers like Galvin Kennedy have jumped in to fill the void.

Kennedy is a board-certified personal injury trial lawyer, but he advertises on Spanish-language TV about wage-and-hour problems.

Restaurants, dry cleaners and hotels all take advantage of the manual laborers who make the businesses run, said Kennedy, who estimated he filed 15 to 20 wage cases last year.

Some are undocumented, so they're scared, Kennedy said.

Other clients are used to earning a lot less in their native countries, so they're thankful to earn $4 an hour, he said. The U.S. minimum wage is $5.15 an hour.

And some don't even know the United States has laws regarding overtime and minimum wage.

Lots of business owners think that just because they pay their secretary or other nonmanagerial employees a salary that they aren't eligible for overtime, he said. Paralegals also are supposed to get overtime, but many don't.

So what can a company do to head off the problem?

It's a tough question, said Collins, who would like to become the go-to expert when a company is facing a wage-and-hour claim.

If you do an audit and find a group of employees were misclassified, should you just pay them correctly going forward? Chances are, they'll figure that if they're owed overtime, they should have received it in the past.

L.M. Sixel writes for the Houston Chronicle.