As payroll drops with WTI, employment litigation may skyrocket

Steven F. Griffith Jr. and Stephanie N. Murphy, Baker Donelson, New Orleans

The steep drop in oil prices over the past year led to approximately 91,000 energy-related job cuts since December 2014. These cuts, felt across the industry, are expected to spur an increase in employment litigation.

First, wage and hour suits under the Fair Labor Standards Act (FLSA) have been popular with plaintiffs’ attorneys for years, and the oil and gas industry is an attractive target. Under the FLSA, the failure of an employer to make payments owed exposes the employer to liability for the unpaid amounts, as well as a penalty equal to the amount not paid, plus attorneys’ fees and costs. Suits may be brought by the workers deprived of the amounts otherwise owed, or they can be brought in a representative capacity on behalf of similarly-situated workers. Suits under the FLSA may be particularly prevalent in this climate for three reasons: (1) former workers do not have to file a claim with the Equal Employment Opportunity Commission (EEOC) thereby allowing them to immediately pursue civil litigation; (2) the industry uses a healthy amount of independent contractors, who may assert they should have been classified as employees, entitling them to overtime pay; and (3) and the ability of plaintiffs’ attorneys to file a collective action lawsuit which functions much in the same way that a class action would operate, but with easier thresholds of proof.

Next, the oil and gas industry should be cognizant of the Worker Adjustment and Retraining Notification (WARN) Act which requires employers with one hundred or more employees to provide sixty calendar days of notice in advance of mass layoffs. Employees entitled to advance notice under WARN include managers and supervisors, as well as hourly and salaried workers. Importantly, the WARN Act may be triggered when as few as fifty workers (not counting part-time workers) are laid off and may also be triggered by temporary layoffs of workers.

Finally, the oil and gas industry may see a rise in claims under Title VII or the Age Discrimination in Employment Act (ADEA). Title VII prohibits discrimination based upon race or gender, while the ADEA forbids age discrimination against people who are age forty or older. These statutes forbid discrimination when it comes to any aspect of employment, including firing, layoffs, demotions, fringe benefits, or any other term or condition. Under both statutes, a former employee must first file a charge with the EEOC. And, if waivers are being sought in exchange for a severance payment, additional obligations are imposed by the ADEA.

Whenever an industry sees a high degree of employee turnover, some portion of those left without employment seek the advice of plaintiffs’ counsel, and then plaintiffs’ counsel begin the process of finding ways to bring claims against the former employers. Consequently, as an industry with higher than average compensation, oil and gas companies should be cognizant of the various laws which former workers may invoke after they are laid off. In anticipation of such suits, the oil and gas industry can tighten up policies and make sure they have thoroughly documented all layoffs and complied with appropriate state and federal regulations.

About the authors
Steven F. Griffith Jr. Steven F. Griffith Jr. is a shareholder in the New Orleans office of Baker Donelson. In his national practice, he assists clients in various industries, including construction, marine and hospitality.  

Stephanie N. Murphy Stephanie N. Murphy is an associate in the New Orleans office of Baker Donelson. As a member of the Advocacy Department, she assists clients in general business-related litigation matters.  

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