If your employer has underpaid you, by failing to pay you overtime or violating other wage laws, you may be thinking about hiring a lawyer to help you recover your unpaid wages. One thing that’s probably on your mind is: How much is it going to cost? In this article, you’ll learn the different type of fee arrangements and what a lawyer may charge you in your wage and hour case. (For information about wage and hour laws, see Wage and Hour Laws in Your State.)
Your employer must pay you according to federal and state (and sometimes city) laws that govern minimum wage, overtime pay, meal and rest breaks, and other issues related to wages, hours, and working conditions. This collection of laws and regulations is commonly called “wage and hour laws.” An employee who wins a lawsuit for unpaid minimum wage, overtime pay, or other wage violations may be awarded attorneys’ fees and costs by the court (see “Court-Ordered Fees” below).
There are a variety of fee arrangements that a lawyer may agree to. The best arrangement for you and your lawyer will depend, in part, on the particular services you want the lawyer to perform.
If you don’t want to file a lawsuit, you may be able to hire a lawyer on an hourly basis. In general, a lawyer will be more willing to agree to an hourly fee if you’re asking him or her to perform services that are limited in time, scope, or complexity. For example, if you want a lawyer to engage in informal negotiations with your employer, or help you file a wage claim with your state’s labor commissioner, a lawyer may agree to assist you for an hourly fee. Before agreeing to an hourly arrangement, ask the lawyer for an estimate of the total number of hours that he or she expects to work on your behalf. The lawyer may even be willing to accept a cap on the total hourly fees.
This type of arrangement is beneficial if the lawyer will only need to do a minimal amount of work. However, if you want to retain the lawyer for less limited purposes, such as filing and handling a lawsuit, you should discuss other fee arrangements. Because lawsuits can take hundreds of attorney hours, an hourly fee can quickly add up to more than you are able to pay.
If you and the lawyer believe that you have grounds to file a lawsuit for unpaid wages, the lawyer may take your case on a contingent fee basis. A contingent fee is an agreed percentage (usually ranging from one-third to 40%) of the total amount recovered in the action, whether awarded in court or negotiated through a settlement. With this type of arrangement, you won’t owe the lawyer any fees unless you receive compensation from your employer. However, your lawyer might ask you for a retainer fee, in addition to the contingent fee, to guarantee him or her some fees in the event that you lose your case. The amount of the retainer will be agreed upon by you and your lawyer.
Under federal and some state wage and hour laws, an employee who wins a lawsuit for unpaid wages or other wage violations is entitled to an award of his or her attorneys’ fees. One reason for court-awarded attorneys’ fees is to provide an incentive for lawyers to take wage and hour cases. If your case is based on wage law violations, a lawyer may be more willing to take your case than if it was based on a law that did not authorize an award of attorneys’ fees (such as a breach of contract case).
If you have a contingent fee agreement with your lawyer, the attorneys’ fees won’t go directly to your lawyer. Instead, any fees awarded by the court would be added to your total damages award to determine the lawyer’s percentage. In other words, the lawyer’s contingent fee may amount to more than the fees awarded by the court.
You may want to consider asking your lawyer to agree to a fee arrangement that is a hybrid of those discussed above. You may want to propose, for example, that your lawyer try to negotiate a settlement of your claims at a reduced hourly rate and a reduced contingent fee. This may be a good option if you’re not interested in filing a lawsuit because the attorney won’t be putting in as many hours. This may also make it easier for you to find a lawyer to represent you; if settlement efforts fail, the lawyer will still receive at least some of his or her fees.
Like any contract, your fee agreement with your lawyer, whether it’s hourly, contingent, or some other arrangement, is negotiable. Ask each lawyer you contact about all of the fee arrangements they would consider for the services that you are requesting. Then you can make a proposal and finalizing the agreement.
Most states require attorneys to put fee agreements in writing. If, for whatever reason, your lawyer does not do so, ask that the fee agreement be put in a written contract that you both sign (be sure to ask for a copy of the signed agreement). This will greatly reduce the likelihood of later misunderstandings or conflicts about how much of your recovery your lawyer is entitled to.