If you’ve spent any time looking at the legal headlines lately, you’ve probably noticed something. The world of employment law is getting messy. Honestly, it feels like every other week there’s a new multi-million dollar settlement hitting the wires, and if you're an employer—or even just an employee wondering why your paycheck looks "off"—keeping up is basically a full-time job.
Lately, wage and hour class action news has been dominated by massive numbers and strange legal pivots. We aren't just talking about a few bucks missing from a lunch break. We are talking about $400 million settlements and courts striking down agreements that everyone thought were ironclad.
The Massive Reality of Wage-Fixing
The biggest bombshell in recent memory is the finalized $398 million settlement involving the poultry industry. In June 2025, Judge Stephanie A. Gallagher gave the green light to this massive payout in a Maryland federal court. Why? Because a group of poultry processors allegedly spent years coordinating to keep worker wages artificially low.
It’s one of the largest antitrust recoveries in history.
What’s wild about this case—and what most people miss—is that it wasn't sparked by some government investigation. Private law firms like Cohen Milstein and Hagens Berman did the heavy lifting themselves, digging through over a million documents to prove the collusion. It sends a pretty clear signal: the "big guys" aren't just being watched by the Department of Labor; they’re being watched by anyone with a spreadsheet and a law degree.
Why Disney is Writing $233 Million Worth of Checks
Then you’ve got the situation at Disneyland. In late 2025, a California judge finalized a $233 million settlement for more than 51,000 workers.
The core of the fight? Something called "Measure L."
It’s an Anaheim ordinance that says if a company gets a city subsidy, they have to pay a "living wage." Disney tried to argue they didn't technically count as receiving a subsidy, but the court wasn't having it. The workers alleged that Disney was effectively "stealing" wages by not following the local minimum.
Now, Disney says most of their staff already makes over $22 an hour. Still, that $233 million is going back to people who were underpaid years ago. It’s a huge reminder that local laws can sometimes carry more weight—and more risk—than federal ones.
The Danger of "Settling" Too Early
You might think that if a company gets sued, the smartest move is to just pay the workers directly and make the problem go away. That’s what The Merchant of Tennis tried to do in California.
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They paid out $875,000 to about 950 employees while a class action was pending. They thought they were being proactive.
The court disagreed.
On January 14, 2026, a California appeals court basically tore those settlements apart. The court found that the company misled the workers. They told employees that class members usually only get 40% of a settlement and didn't mention that the company’s own motion to end the case had already been denied.
Basically, the court said you can't trick people into signing away their rights. If you're going to settle, you have to be transparent. If you aren't, you might end up paying $875,000 and still getting sued for the same thing.
New Rules for 2026 You Can't Ignore
We are now seeing a massive wave of state-level changes that went into effect on January 1, 2026. If you haven't checked your payroll settings this month, you're probably already behind.
- California’s SB 642: This one is a beast. It changes the definition of "wages" to include almost everything—bonuses, stock options, travel expenses, even life insurance. It also stretches the statute of limitations for pay discrimination out to three years.
- Washington’s Minimums: As of early 2026, Washington state has some of the highest exemption thresholds in the country. If you aren't paying your "exempt" managers enough, they might actually be entitled to overtime.
- The "Lactation Pay" Rule: In Illinois, SB 1288 now requires employers to compensate workers for lactation breaks at their regular rate. Most states allow these to be unpaid, but Illinois just changed the game.
AI is Entering the Courtroom
There is also a weird trend starting to emerge regarding Artificial Intelligence. Law firms like Fisher Phillips are already predicting that "AI-generated evidence" is going to be the next big battlefield in wage and hour litigation.
Think about it.
We now have AI notetakers in meetings and AI-drafted emails. When a worker claims they were forced to work off-the-clock, lawyers are going to start subpoenaing those AI summaries to see what was actually said.
Plus, there’s the "Exemption Trap." If a company brings in AI to do the "independent judgment" part of a manager's job, that manager might no longer qualify for the administrative exemption. Suddenly, a salaried boss becomes an hourly worker who is owed three years of back overtime. It sounds like sci-fi, but it's happening.
What Most People Get Wrong About the DOL
A lot of business owners think the Department of Labor (DOL) is the only thing they need to worry about. But in 2026, the federal DOL is taking a more "business-friendly" stance. They’ve revived the PAID program, which lets companies self-audit and fix mistakes without huge penalties.
Here is the catch: Settling with the DOL does not stop a class action.
Plaintiffs' attorneys are smart. If they see a company settling with the federal government, they know there’s blood in the water. They will often file a state-level class action the next day. Since states like New York and California have much harsher penalties than the federal government, the DOL settlement ends up being just the opening act.
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Actionable Steps for the New Year
If you’re trying to stay out of the wage and hour class action news cycle, "hoping for the best" isn't a strategy.
- Audit the "Total Compensation" definition. If you have staff in California, ensure your pay transparency disclosures include bonuses and stock options, not just base salary.
- Review remote worker locations. A recent Massachusetts ruling (Proxet Group LLC) found that a remote worker in Ukraine could sue their Massachusetts employer under state law. Just because your worker isn't in your office doesn't mean your state's laws don't apply to them.
- Check your "rounding" settings. Many recent settlements, like the $98 million Providence Health verdict, came from timeclocks that rounded down. In 2026, rounding is a litigation magnet. Move to "punch-to-punch" pay immediately.
- Re-verify "Independent Contractors." The FedEx $240 million settlement still haunts the industry. If you control how, when, and where a contractor works, they are probably an employee. Fix the classification before a lawyer does it for you.
- Watch the AI footprint. If you are using AI to track productivity or summarize shifts, realize that those logs are discoverable in court. They can be used to prove—or disprove—unpaid work time.
The landscape is shifting away from federal enforcement and toward aggressive state laws and private litigation. Staying compliant means looking at the fine print of every local ordinance, because as Disney found out, a city-level rule can cost you a quarter of a billion dollars.
Next Steps for Compliance
- Download the 2026 IRS mileage rates (currently 72.5 cents) to avoid reimbursement lawsuits.
- Update your "Notice of Labor Rights" for all California and Washington employees to meet the new January annual notification requirements.
- Review all non-compete clauses, especially in Wyoming and Illinois, where new bans took effect this month.