If your employer (or former employer) already owes you unpaid wages, overtime, pay for breaks you had to work through, or other compensation you never received, you may be wondering whether you can afford to hire a lawyer to help you get your money back. The good news is that employment lawyers representing employees usually charge their clients on a contingency fee basis. This means the lawyer gets paid only if you win, out of the money you receive as a settlement or award.
Below, we explain how attorney fees and court costs work in a case for overtime or other unpaid wages.
Your first step in choosing an attorney – and deciding whether to move forward with your claims against your employer – is an initial consultation. The initial consultation provides you and the attorney an opportunity to decide whether and how you will work together.
Once you have gathered a few referrals (from friends, colleagues, or the directories and other resources we list here), you should contact each lawyer to set up a meeting. At the meeting, you will explain why you think you were underpaid, providing copies of any documents or other evidence you have (such as pay stubs or records of hours worked). The lawyer will review these facts, explain the legal theories that might apply to your situation, and describe how the lawyer would move forward in representing you, if you have strong legal claims against your employer.
Many attorneys offer an initial consultation free or at a reduced hourly or flat fee. For example, an attorney might offer a free 45-minute consultation, a consultation of up to two hours for a flat fee of $300, or a consultation of any length for an hourly fee of $150. When you call to set up your consultation, ask what the attorney charges for the consultation. Also find out what the attorney would like you to bring. Some attorneys ask new clients to prepare a timeline of events or create a spreadsheet or written chart of pay discrepancies, for example. Particularly if you are paying by the hour, you will want to be efficient in explaining your situation.
If you and the attorney decide to work together, the attorney will give you a written retainer agreement to sign, setting forth the terms under which you will work together. The retainer agreement will explain how fees and costs will be paid. Read this section carefully, and ask the attorney to explain anything you don’t understand.
As explained above, attorneys representing employees typically work on a contingency fee basis. This means you don’t have to pay the attorney out of pocket for his or her time. Instead, the attorney collects a fee only if you win, and the attorney’s fee is a percentage of what you receive.
Within this basic framework, there is plenty of room for variation in, for example, how large a fee the attorney charges, how costs are paid, and what happens if your employer is ordered to pay your attorney fees. Here are some provisions to look for:
- Contingency fee percentage. What percentage of the total award will the attorney take? Does that percentage change if the case goes to court? Because an attorney’s hours really start to add up as a case nears trial, it’s not unusual for an attorney to charge a higher contingency fee percentage if your employer doesn’t settle. For example, a fee agreement might provide that the lawyer gets 33% of any settlement or award until 90 days before trial, when the percentage increases to 40%.
- Court and litigation costs. Who will pay the costs of litigation? Generally, the client (you) must pay expenses such as court filing fees, deposition fees, the cost of expert witnesses, and so on. Some lawyers will agree to advance these fees. This means the lawyer pays the fees, but you are ultimately responsible to pay them, whether you win or lose. Some lawyers ask clients to pay a cost retainer: a deposit that the attorney will put into a trust account, to be used only for costs on the case. The retainer agreement should address this issue, including whether you will have to replenish the cost deposit if it gets used up during the case. And, the agreement should specify that you will receive monthly statements of costs paid from the cost retainer and the balance remaining.
- Order of payment of costs and fees. If, as is most likely the case, you are paying your attorney a percentage of what you win, the amount you get to keep will depend in part on whether costs are subtracted before or after the attorney takes his or her cut. For example, let’s say you are awarded $300,000 total in a lawsuit. Your retainer says you owe your attorney 40% of the award, and the costs of suit are $30,000. If costs are subtracted before the fee is calculated, you must pay $30,000 in costs and $108,000 in attorney fees (40% of $270,000). You get to keep $162,000. If the fee is calculated before costs are subtracted, you must pay $30,000 in costs and $120,000 in fees, meaning you keep only $150,000.
- Statutory attorney fees. Many employment laws require an employer who loses a lawsuit to pay the employee’s attorney fees. The Fair Labor Standards Act (FLSA), the federal law that sets the minimum wage, requires employers to pay overtime, and addresses other wage and hour issues, includes this type of attorney fee provision; many state wage and hour laws do as well. The retainer agreement should state how the attorney’s fee will be calculated if fees are awarded. For example, the agreement might state that the attorney gets a percentage of the total amount awarded, including any amount awarded as attorney fees. Or, it might state that the attorney gets the higher of either the attorney fee award or the contingency percentage agreed to in the contract.