Wage and Hour Class Action News: Rulings, PAGA Reform, and DOL Rules

Recent wage and hour class action news is dominated by a Supreme Court ruling that lets last-mile delivery drivers avoid forced arbitration, a growing circuit consensus that limits nationwide FLSA collectives to the employer’s home state, record Department of Labor back-wage recoveries alongside two major proposed rules on independent contractors and joint employment, and California’s PAGA overhaul reshaping how state-law wage cases proceed.

Last-Mile Drivers Can Now Sue in Court

On May 28, 2026, the Supreme Court unanimously held in Flowers Foods, Inc. v. Brock that “last-mile” delivery drivers who transport goods entirely within a single state can qualify for the Federal Arbitration Act’s transportation worker exemption. Employers cannot force them into individual arbitration.¹ Justice Gorsuch, writing for the Court, rejected the argument that a worker must physically cross state lines or interact with interstate vehicles to be “engaged in interstate commerce.” If the goods originated out of state and the driver completes the final leg of that journey, the exemption applies.²

Delivery drivers, warehouse workers, and logistics employees handling the tail end of an interstate supply chain may now pursue wage and hour claims through class or collective actions in court. The Court left open whether independent contractor status or ownership of a worker’s own vehicle changes the analysis, which will push further litigation into the lower courts.¹

Nationwide FLSA Collectives Keep Shrinking

A separate trend is cutting the other way. In May 2026, the Second Circuit ruled that federal courts in New York, Connecticut, and Vermont cannot hear the claims of out-of-state workers in an FLSA collective action unless the employer is headquartered or incorporated in the forum state. The court applied the Supreme Court’s 2017 Bristol-Myers Squibb personal jurisdiction framework, requiring each opt-in plaintiff to independently show jurisdiction over their specific claim.³

That decision aligns the Second Circuit with the Third, Sixth, Seventh, and Eighth Circuits. The Ninth Circuit reached the same conclusion in July 2025 in Harrington v. Cracker Barrel Old Country Store, Inc., vacating a district court order that had authorized nationwide notice to opt-in plaintiffs based on a single forum-state plaintiff.⁴ Only the First Circuit has gone the other way. The Supreme Court denied dueling cert petitions in the Cracker Barrel case in February 2026, leaving the split in place.⁵

For workers, a single FLSA case is increasingly unlikely to sweep in employees across the country. Plaintiffs’ lawyers will more often need to file parallel actions in multiple states, raising cost and complexity.

Certification Standards Still Split

Courts also disagree about how easy it should be to conditionally certify an FLSA collective in the first place. Most circuits still use a lenient two-step process, where workers clear a low bar to send notice to potential opt-ins and the employer can challenge the group later. The Ninth Circuit reaffirmed that approach in Cracker Barrel.⁴ The Fifth Circuit replaced that process with a stricter single-step inquiry in 2021, and the Sixth Circuit adopted an even tougher standard in 2023. After the Sixth Circuit’s change, certification motions there dropped from 22 in 2023 to 12 in 2024.⁶

Eli Lilly asked the Supreme Court to resolve the split, but the justices denied cert in January 2026.⁷ Nationwide, conditional certification still favors plaintiffs: courts granted 125 of 157 motions in 2024, an 80 percent success rate.⁶

Winning on Misclassification Isn’t Winning the Case

In February 2026, the Fifth Circuit decided Merritt v. Texas Farm Bureau. Jerry Merritt, an agency manager classified as an independent contractor, prevailed on misclassification at summary judgment and established he was owed 816 hours of overtime. But the jury found Texas Farm Bureau lacked actual or constructive knowledge that Merritt was working those extra hours, and the Fifth Circuit affirmed.⁸

Two takeaways matter for future cases. The absence of a timekeeping system does not, by itself, establish that an employer should have known about overtime, especially where employees work autonomously and off-site. And juries can be properly instructed that employees share responsibility for notifying the employer when they work extra hours.⁸ Beating misclassification does not automatically win damages.

Exemption Burden of Proof Settled

In January 2025, the Supreme Court unanimously resolved a longstanding circuit split in E.M.D. Sales, Inc. v. Carrera, holding that employers need only meet the preponderance of the evidence standard when proving a worker is exempt from FLSA minimum wage and overtime protections. The Fourth Circuit had applied the stricter “clear and convincing” standard, which the Court rejected as inconsistent with the default rule in civil litigation.⁹ The decision makes exemption defenses somewhat easier at trial.

DOL Recoveries, Investigator Cuts, and Two Proposed Rules

The Wage and Hour Division collected nearly $260 million in back wages for more than 175,000 workers in fiscal year 2025 and assessed $58.7 million in civil monetary penalties, for a combined total of roughly $318 million. That was a 33 percent increase over the prior year and the highest total in a decade.¹⁰ Overtime violations drove nearly 80 percent of all FLSA back-wage findings.¹¹

The division did this while closing fewer cases and operating with the lowest investigator headcount on record, 611 as of May 2025, after losing roughly 20 percent of its staff through buyouts, early retirement, and deferred resignation. The agency has leaned on opinion letters and employer assistance, stopped seeking liquidated damages for wage violations, and halted enforcement of Biden-era worker misclassification rules.¹⁰ Child labor remained a priority, with more than 950 cases concluded and over $37 million in penalties assessed in fiscal 2025.¹¹ Notable 2026 enforcement actions include over $1 million recovered for 24 warehouse workers in Calexico, California, $468,505 for 137 construction workers in Newport Beach, and $200,000 for 19 restaurant workers in Oregon.¹²

Independent Contractor Rule

On February 27, 2026, the DOL proposed rescinding the 2024 independent contractor rule and replacing it with a five-factor “economic reality” test that assigns outsized weight to two “core” factors: the degree of control the employer exercises over the work, and the worker’s opportunity for profit or loss based on initiative or investment.¹³ Three additional factors (skill required, permanence, and whether the work is part of an integrated production unit) would serve as tiebreakers.¹⁴ The proposal emphasizes actual workplace practices over contract labels. The comment period closed April 28, 2026, and the 2024 rule technically remains on the books for private litigation even though the DOL has stopped applying it.¹⁵

Joint Employer Rule

On April 23, 2026, the DOL published a separate proposed rule to clarify joint employer status under the FLSA, FMLA, and Migrant and Seasonal Agricultural Worker Protection Act. The proposal uses a four-factor test derived from the Bonnette line of cases to determine when two entities share wage responsibility. Comments are due June 22, 2026.¹⁶

Overtime Salary Threshold Stays at 2019 Levels

The federal overtime salary threshold remains $684 per week ($35,568 per year) after a Texas federal court vacated the Biden-era rule in November 2024. That rule would have raised the threshold to $58,656 by January 2025 with automatic triennial increases, but the court found the DOL exceeded its statutory authority, relying in part on the Supreme Court’s 2024 Loper Bright decision.¹⁷ A notice of appeal was filed, but the current DOL is enforcing the 2019 thresholds and has indicated it may pursue changes through new rulemaking.¹⁸ In May 2026, the DOL issued a technical amendment restoring the pre-2024 regulatory text for the executive, administrative, and professional exemptions.¹²

Filings and Settlements

The top 10 wage and hour class and collective settlements in 2024 totaled $614.55 million, down from $742.5 million in 2023 but up from $574.55 million in 2022.⁶ Federal courts saw 1,673 FLSA collective action filings in 2024, with the Eastern District of New York leading at 226. Food services generated the most compliance actions, at 3,827.¹⁹

Washington state has seen one of the sharpest surges. Employment class action filings there jumped from roughly 68 in 2021 to about 765 in 2025, with about 32 percent of 2025 cases involving meal and rest break claims. A September 2024 state appellate ruling, Androckitis v. Virginia Mason Medical Center, drove much of that volume by endorsing a 30-minute penalty for each noncompliant meal period and allowing those penalties to be doubled for willful violations.²⁰²¹

California PAGA Reform Is Changing Case Dynamics

California’s overhaul of the Private Attorneys General Act, effective for claims filed on or after June 19, 2024, is reshaping state-law wage cases. Plaintiffs must now have personally experienced the violations they allege, and the statute of limitations is capped at one year.²² Employers that take “reasonable steps” to comply before receiving a PAGA notice can cap penalties at 15 percent of the maximum; those acting within 60 days of notice face a 30 percent cap.²³ The aggrieved employees’ share of penalties rose from 25 percent to 35 percent.

Early results suggest the reforms are working as intended. Defense lawyers report dismissing more claims early by showing the plaintiff did not personally experience the alleged violations, and cases are resolving faster and for reduced penalty amounts. Annual PAGA filings in 2025 totaled 9,343, a modest drop after the 2024 surge of plaintiffs rushing to file before the reforms took effect.²⁴ Courts now have explicit authority to limit the scope of PAGA claims to keep them manageable at trial.²²

New State Laws Opening Fresh Exposure

Several 2025 and 2026 state laws create new paths for wage and hour class actions:

California SB 261 imposes penalties up to three times the outstanding amount when a final judgment for unpaid wages remains unsatisfied 180 days after the appeal period expires, with joint and several liability extending to successors of the judgment debtor.²⁵
California AB 578 prohibits food delivery platforms from using tips to offset drivers’ base pay and requires itemized pay breakdowns.²⁶
California SB 642 clarifies the “pay scale” definition under pay transparency law and extends the statute of limitations to three years, with a six-year look-back for damages.²⁵
California AB 692 bans “stay or pay” provisions requiring workers to repay training costs or other employer debt upon leaving a job.²⁵
New York’s Trapped at Work Act, signed in December 2025, likewise prohibits employment promissory notes that penalize workers for leaving before a set period, with fines of $1,000 to $5,000 per violation.²⁷
Oregon SB 426 establishes joint and several liability for property owners and general contractors for unpaid wages owed to workers not covered by a collective bargaining agreement.²⁶
Illinois HB 3773 and Texas HB 149 address employers’ use of artificial intelligence in employment decisions, with Illinois prohibiting AI that discriminates or uses zip codes as a proxy for protected classes.²⁶

GEO Group Detainee Case Returns to Trial Court

In February 2026, the Supreme Court decided GEO Group, Inc. v. Menocal, brought by workers in an immigration facility who alleged they were paid as little as $1 per day. The legal question was narrow: whether the company could take an immediate appeal of a pretrial ruling rejecting its government-contractor defense. Justice Kagan, writing for the Court, held that the “Yearsley” defense is a defense to liability at trial, not an immunity from suit, and therefore does not qualify for immediate appellate review.²⁸ The case returns to the district court for a full trial on the merits.²⁹

Emerging Claim Types

Beyond traditional overtime and misclassification disputes, newer categories of claims are gaining traction. Plaintiffs are challenging the exempt status of managers who spend most of their time on non-management tasks, and some have begun arguing that employers’ use of AI software strips managers of the decision-making authority that defines the FLSA administrative exemption.¹⁹ Questions are also emerging about whether equity incentive plans for non-exempt employees must be included in the regular rate for overtime calculations. Gig economy misclassification litigation continues, with the Wisconsin Supreme Court ruling in 2024 that Amazon Flex drivers are employees.³⁰

1
Supreme Court of the United States. Flowers Foods, Inc. v. Brock, No. 24-935
2
FMG Law. Supreme Court Expands FAA Exemption for Last-Mile Drivers
3
Wage Hour Litigation Blog. Second Circuit Restricts Nationwide FLSA Collective Actions
4
Perkins Coie LLP. Ninth Circuit Clarifies FLSA Collective Action Certification and Jurisdiction
5
SCOTUSblog. Harrington v. Cracker Barrel Old Country Store, Inc.
6
Duane Morris LLP. Key Trends in Wage and Hour Class and Collective Actions
7
U.S. Chamber of Commerce. Richards v. Eli Lilly
8
Wage Hour Litigation Blog. No Employer Knowledge, No Overtime: Fifth Circuit Affirms Defense Verdict
9
Dechert LLP. Supreme Court Unanimously Rejects Stricter Standards for Minimum Wage and Overtime Exemptions
10
Bloomberg Law. Wage Hour Penalties Surge by Millions as DOL Closes Fewer Cases
11
Thomson Reuters. DOL Wage and Hour Chief Outlines 2026 Priorities
12
U.S. Department of Labor. Wage and Hour Division News Releases
13
U.S. Department of Labor. Independent Contractor Status Under the FLSA: 2026 Rulemaking
14
Jackson Lewis PC. DOL’s Proposed 2026 Independent Contractor Rule: What Employers Need to Know
15
Butler Snow LLP. Revisiting Independent Contractor Classification
16
Federal Register. Joint Employer Status Under the Fair Labor Standards Act, FMLA, and MSPA
17
U.S. Small Business Administration. Federal Court Strikes Down Labor Department’s Overtime Rule
18
American Feed Industry Association. Department of Labor Overtime Rule Updated
19
ACC. CLE on Wage and Hour Litigation
20
Seyfarth Shaw LLP. Washington Employment Class Actions Are Surging
21
Perkins Coie LLP. New Washington Ruling Endorses 30-Minute Penalty for Meal Period Violations
22
CalChamber. PAGA Reforms Already Delivering Positive Results
23
Orrick. PAGA Reform: What California Employers Need to Do Now
24
Wage Hour Litigation Blog. Wage Hour Litigation Blog
25
Holland & Knight LLP. A Look at New California Labor and Employment Laws for 2026
26
Littler Mendelson PC. New Year, New Employment Laws: What Takes Effect January 1, 2026
27
Jackson Lewis PC. New York State and City Legislative Update
28
SCOTUSblog. Court Rejects ICE Contractor’s Right to Immediate Appeal
29
Cornell Law Institute. GEO Group, Inc. v. Menocal, No. 24-758
30
Worksome. Cases of Worker Classification Going Horribly Wrong