By: Gerald L. Maatman, Jr., Christopher DeGroff, Matthew J. Gagnon, and Alex S. Oxyer

Seyfarth Synopsis:  On January 14, 2021, the EEOC approved and issued newly updated procedures regarding its delegation of litigation authority and procedures, as well as its revised procedures for participating in cases as amicus curiae. These changes, first reported by us here, have been long-awaited and are a stunning change to the framework of how EEOC lawsuits get filed against employers.

The purpose of these now-approved procedures appears to be an effort to rein in many of the powers previously held by the EEOC’s General Counsel, and in turn the Regional Attorneys, who previously held considerable discretion over the types of lawsuits that would be filed by the Commission and the legal positions the EEOC would advance. Stated otherwise, it shifts that power and discretion to the five Commissioners themselves.

The new litigation procedures make it clear that it is now the Commissioners, and not the General Counsel, that will make the decisions to commence or intervene in litigation. According to the new procedures, the Commission has the ability to vote on all recommendations to litigate. The new procedures were approved by the Commission in a 3-2 vote.

Additionally, the updated amicus curiae procedures provide, among other requirements, that before the Commission participates as amicus curiae in any case, the General Counsel must submit to the Commission a detailed written memorandum describing the positions they propose to take as amicus curiae and must obtain the Commission’s authorization for all amicus participation at each stage of any judicial proceeding. The new amicus procedures were passed by the Commission in a 5-0 vote.

Implications For Employers

For many years, the EEOC General Counsel and the Commission attorneys in the field appeared to exercise broad discretion over the types of cases the EEOC would file, the theories of law that it would pursue, and the litigation tactics that it would employ. Moreover, since the General Counsel was also encouraged to delegate that authority to Regional Attorneys across the country, the result was a sometimes fragmented, district-by-district approaches to EEOC enforcement litigation. These new procedures bring that authority back to the Commissioners and may indicate a desire for a more cohesive and consistent approach to the Commission’s litigation.

The ongoing changes at the Commission are a must-watch for employers as the EEOC continues in its 2021 fiscal year, and we will be tracking the latest developments here.

By: Gerald L. Maatman, Jr., Christopher DeGroff, Matthew J. Gagnon, and Alex S. Oxyer

Seyfarth Synopsis: We are once again pleased to offer our loyal blog readers a breakdown of the five most intriguing developments in EEOC litigation in 2020, in addition to a pre-publication preview of our annual report on developments and trends in EEOC-initiated litigation. This year’s book, titled EEOC-Initiated Litigation: 2021 Edition, provides a comprehensive examination of the EEOC’s filings in FY 2020 (from October 2019 through September 2020), and the major decisions handed down this year in pending EEOC litigation.

Every employer should monitor EEOC litigation activity.  It is the surest way to avoid becoming the EEOC’s next target. Each year, Seyfarth Shaw conducts a thorough analysis of all EEOC activity to keep our readers up to date on current trends and, hopefully, provide a peek inside the EEOC’s decision-making process. Our annual report is targeted towards human resources professionals, corporate counsel, and other corporate decision-makers. We hope that it proves useful as they attempt to steer clear of EEOC-initiated litigation in 2021.

This year, we have once again categorized our analysis of substantive developments in line with the EEOC’s strategic priorities. This is the fourth year of the EEOC’s current Strategic Enforcement Plan (“SEP”), which covers Fiscal Year 2017 through 2021. It has been our experience that analyzing developments in EEOC litigation in light of the enforcement priorities set forth in the SEP provides a better understanding of the EEOC’s focus and agenda.

The full publication will be offered for download as an eBook. To order a copy, please click here.

As always, we like to take a moment at the end of one year, and the beginning of the next, to look back at the most intriguing decisions and developments of the year.

Here is our list of the “top five” most intriguing developments of 2020.

A Year Of Change

FY 2020 saw a flurry of activity at the EEOC. Notably, the EEOC made strides to update its conciliation and mediation procedures, voluntarily scaled back some of its own litigation authority, and sought opportunities to collaborate with its fellow federal agencies. On top of these developments, the EEOC also saw substantial change in its leadership, with three new Commissioners (two Republicans and one Democrat) being sworn in. This activity and change in leadership translated to a significant decline in the number of cases filed by the EEOC against employers in FY 2020, with only 101 total cases filed (as compared to 149 in FY 2019 and 217 in FY 2018).

These will be important developments to continue to watch in FY 2021 and beyond. Our analysis of these issues can be found here.

Development #1:  A Definitive Ruling by the U.S. Supreme Court On LGBTQ Employment Rights

Few issues have garnered as much of the EEOC’s attention over the past few years as its efforts to have LGBTQ discrimination recognized as a prohibited form of discrimination under Title VII.  That issue was finally resolved in 2020 by the Supreme Court in the landmark decision of R.G. and R.H. Funeral Home v. EEOC/Bostock v. Clayton County, which decided three cases that touch on these issues. On June 15, 2020, the Supreme Court held that Title VII prohibits discrimination against gay or transgender employees as a form of sex discrimination.  The 6-3 decision authored by Justice Gorsuch represents a significant victory for the EEOC.

In its opinion, the Supreme Court held that “[a]n employer who fires an individual for being homosexual or transgender fires that person for traits or actions it would not have questioned in members of a different sex. Sex plays a necessary and undisguisable role in the decision, exactly what Title VII forbids.” 140 S.Ct. 1731, 1737 (June 15, 2020). The Supreme Court reasoned that because discrimination on the basis of homosexuality or transgender status requires an employer to intentionally treat individual employees differently because of their sex, an employer who intentionally penalizes an employee for being homosexual or transgender also violates Title VII.

The EEOC has been diligently pursuing this theory of discrimination in the courts for years, resulting in quite a few victories in line with the Bostock decision.  Employers should expect that the EEOC will be even more vigilant in enforcing this new federal workplace protection for the foreseeable future. The full implications of this decision’s impact on the American workforce will have to wait for future developments as Bostock is interpreted and applied in courts across the country. Further analysis of this case can be found here and here.

Development #2:  In Religious Discrimination Law: Accommodations In The COVID-19 Era

In a notable decision involving the COVID-19 pandemic, in EEOC v. Baystate Medical Center, the EEOC alleged that an employer’s policy requiring employees to either receive a flu vaccine, or wear a mask if they have a religious or health-related objection to vaccination, violated Title VII. Case No. 16-CV-30086 (D. Mass. June 15, 2020).  The EEOC contended that the employee declined the vaccination because of her Christian faith. The employer had provided the employee with a mask to wear inside the hospital buildings, but after the employee repeatedly pulled down her mask to speak with people over the phone and in person, the employer suspended and eventually terminated her employment for failure to comply with the policy. In its ruling, the Court opined that the charging party had no religious objection to the mask requirement. Moreover, the Court held that the EEOC failed to present any evidence from which a jury could find that the mask requirement was merely a pretext for its actual intention of forcing individuals to get vaccinated. Developments in this area will be a must-watch for employers in 2021.

Development #3:  Reasonable Accommodations Under The ADA: Increased Scrutiny Of “Direct Threat” Defense

In EEOC v. T&T Subsea, LLC,  the U.S. District Court for the Eastern District of Louisiana considered whether a diver was qualified for his position even though he could not pass a dive physical when he was terminated. 457 F. Supp. 3d 565 (E.D. La. 2020). The employer asserted a “direct threat” defense, arguing that the charging party posed a significant risk to the health or safety of others that could not be eliminated by reasonable accommodation.  The Court denied summary judgment to the employer on that defense because of the existence of “genuine issues of material fact regarding whether [employer] meaningfully assessed [charging party’s] ability to perform his job safely based on the best available objective evidence and reasonably concluded that [charging party] posed a direct threat.”  Id. This case highlights the scrutiny under which the “direct threat” defense has been analyzed by some courts.

Development #4:  Continued Focus On Complex Employment Relationships And Structures

The EEOC has recently put more focus on complex employment relationships and structures in the 21st century workplace, specifically with respect to temporary workers, staffing agencies, independent contractor relationships, and the on-demand economy. For example, in EEOC v. 1618 Concepts, Inc., the U.S. District Court for the Middle District of North Carolina refused to dismiss from a lawsuit two corporate affiliates of the entity that actually employed the charging party. No. 19-CV-672, 2020 WL 87994 (M.D.N.C. Jan. 7, 2020). In that case, a male dishwasher alleged that he had been sexually harassed by a male coworker, that his managers witnessed at least one of those instances of sexual harassment, and that the employer generally was aware of the harassment. The EEOC issued a letter of determination to the charging party’s employer entity and two affiliated entities.

The employer argued that the two entities that were not named in the charge should be dismissed because the failure to name a party in an EEOC charge constitutes a failure to exhaust administrative remedies against that party and a subject-matter jurisdiction defect as to any Title VII claim brought against the unnamed party. The District Court found that the three employer entities named in the lawsuit were closely interrelated; they shared employees, common ownership, common management, and corporate officers.  The District Court also found that each of the employer entities had effective notice of the EEOC’s investigation and therefore could not claim that they had been prejudiced by lack of notice.

Development #5:  Additional Insight Into Interaction Between Title VII And The Equal Pay Act

In EEOC v. First Metropolitan Financial Service, Inc., the U.S. District Court for the Northern District of Mississippi had an opportunity to apply Title VII and the Equal Pay Act (“EPA”) in a way that elucidated their different burdens of proof and burden-shifting schemes. 449 F. Supp. 3d 638 (N.D. Miss. 2020). In the case, the EEOC brought a class action complaint under the EPA and Title VII, alleging that a financial lending company paid female Branch Managers less than male Branch Managers. The employer argued that the two female Branch Managers did not have substantially similar responsibilities as their male Branch Manager comparators because they had been hired to manage a new branch, which had relatively few outstanding loans and therefore less responsibility compared to more established branches.

In its opinion, the Court noted that the two statutes apply different standards for establishing a prima facie case, but nevertheless concluded that “[h]aving found that the Plaintiff successfully established a prima facie case under the Equal Pay Act, the Court also finds that the evidence used under the EPA burden is sufficient to establish a prima facie case under Title VII.”  Id. However, the Court’s opinion reflected critical nuances between the burdens of proof after a prima facie case had been established under each law.

***

It is possible that the incoming Biden administration will bring new and significant changes to the EEOC’s enforcement program. But with a Republican-led Commission in charge until 2022, it is difficult to say how quickly the new administration can implement such changes. Against this backdrop of political change, 2021 is also the last year of the current Strategic Enforcement Plan. That could make this year an interesting one in terms of changing perspectives and priorities as the agency decides on a new enforcement path for the next four years. We fully expect that those changes will reveal themselves in the theories the EEOC chooses to advance and the types of cases they file just as much as they will in the EEOC’s official pronouncements. We look forward to keeping our readers apprised of these changes as they occur!

 

Seyfarth Synopsis: In our continuing video blog series analyzing the findings in our Workplace Class Action Report, trend #5 focuses on the success factor of the plaintiffs’ bar for class certification rulings in 2020. In the video, Jerry Maatman discusses how wage & hour litigation remained the sweet spot for the plaintiffs’ class action bar in 2020 and what this means for employers in 2021. Watch below!

By Gerald L. Maatman, Jr.

Seyfarth Synopsis: In our continuing coverage of the top trends found in Seyfarth’s 2021 Workplace Class Action Litigation Report, wage & hour litigation remained the sweet spot for the plaintiffs’ class action bar over the past year. Based on sheer volume and statistical numbers, workers certified more class and collective actions in the wage & hour space in 2020 as compared to any other area of workplace law and the plaintiffs’ bar achieved a higher rate of success on first-stage conditional certification motions in 2020 than in any other year of the past 15 years.

Complex workplace litigation remains one of the chief exposures driving corporate legal budgetary expenditures. Class actions and multi-plaintiff lawsuits, in particular, continue to provide a source of concern for companies. Layered on top of those problems are the spike in workplace litigation caused by the COVID-19 pandemic.

A prime component in that array of risks is indisputably complex wage & hour litigation. The following map sets forth a circuit-by-circuit analysis of 314 class certification decisions in all varieties of workplace class action litigation, including wage & hour, employment discrimination, and ERISA. As the map reflects, in 2020, complex wage & hour litigation under the FLSA drove more certification briefing and a greater number of certification decisions than other areas combined.

Wage & Hour Certification Trends

The ease with which plaintiffs have achieved first-stage certification in the FLSA wage & hour context surely has contributed to the number of filings in that area, and plaintiffs achieved a higher rate of success on initial certification motions in 2020 than in any other year of the past decade, indicating that wage & hour remains a sweet spot for the plaintiffs’ bar.

For only the fifth time in over a decade, and for the fifth year in a row, wage & hour lawsuit filings in federal courts decreased. That being said, more FLSA lawsuits were filed during each of the preceding eight years – during 2012, 2013, 2014, 2015, 2016, 2017, 2018, and 2019 – than were filed in any year of the past several decades. Many of these cases remain in the pipeline within federal courts, and the result is a burgeoning case load of wage & hour issues.

To be sure, the significant volume of FLSA filings over the past several years has caused the issuance of more certification rulings in the FLSA areas than in any other substantive area of complex employment litigation. Despite the pandemic’s crippling impact on court operations and personnel, courts issued more rulings on wage & hour certification issues in 2020 than they issued in each of the past five years. In particular, federal courts issued 286 decisions on FLSA certification and decertification issues in 2020, an increase from the 267 certification rulings issued in 2019, the 273 certification rulings in 2018, and the 257 certification rulings in 2017.

Of these rulings, 274 addressed first-stage motions for conditional certification of wage & hour collective actions under 29 U.S.C. § 216(b), whereas 12 addressed second-stage motions for decertification. Plaintiffs secured a higher rate of success on the former in 2020, while employers secured a lower rate of success on the latter. In fact, as noted above, plaintiffs achieved a higher rate of success on first stage conditional certification motions in 2020 than they achieved in any year of the past decade. Plaintiffs saw an increase in their rate of success to 84%, up from 81% in 2019 and 79% in 2018, whereas employers saw their rate of success on decertification motions dip to 50% in 2020, down from 58% in 2019 and 52% in 2018.

The analysis of these rulings – discussed in Chapter V of this Report – shows that plaintiffs filed a high predominance of cases against employers in “plaintiff-friendly” jurisdictions such as the judicial districts within the Second and Ninth Circuits. For the second time in a decade, however, rulings were equally voluminous out of the Fifth and Sixth Circuits, which also tended to favor workers over employers in conditional certification rulings.

The following map illustrates this trend:

The statistical underpinnings of this circuit-by-circuit analysis of FLSA certification rulings is telling in several respects.

First, it substantiates that the district courts within the Second, Fifth, Sixth, and Ninth Circuits are the epi-centers of wage & hour class actions and collective actions. More cases were prosecuted and conditionally certified – 40 certification orders in the Second Circuit, 30 certification orders in the Fifth Circuit, 29 certification orders in the Ninth Circuit, and 28 certification orders in the Sixth Circuit – in the district courts in those circuits than in any other areas of the country. For the second time in two years, the Fifth and Sixth Circuits – which encompass the states of Texas, Louisiana, Mississippi, Michigan, Ohio, Kentucky, and Tennessee – had nearly as many (or more) certifications than either the Second or Ninth Circuits.

Second, as the burdens of proof under 29 U.S.C. § 216(b) suggest, plaintiffs won the overwhelming majority of “first stage” conditional certification motions (231 of 274 rulings, or approximately 84%) in 2020, which was even higher than the 2019 numbers (198 of 243 or approximately 81%) and the 2018 numbers (196 of 248 rulings, or approximately 79%), which were themselves the highest percentages of plaintiff wins recorded in the last decade. Further, in terms of “second stage” decertification motions, employers won 50% of those rulings (6 of 12 rulings) in 2020, which represented a dip from the 2019 numbers (14 of 24 rulings, or approximately 58%) and the lowest percentage since 2016.

Overall, these statistics show robust numbers for the plaintiffs’ bar, as plaintiffs prevailed on “first stage” conditional certification motions at a higher rate in 2020 and lost “second stage” decertification motions at a lower rate. The “first stage” conditional certification statistics for plaintiffs at 84% in 2020 were even more favorable to workers than in 2019, when plaintiffs won 81% of “first stage” conditional certification motions, and 2018, when plaintiffs won 79% of “first stage” conditional certification motions. The “second stage” decertification statistics for employers at 50% in 2020 were less favorable to employers than in 2019, when employers won 58% of “second stage” decertification motions, and 2018, when employers won 52% of decertification rulings, and 2017, when employers won 63% of decertification rulings.

The following chart illustrates this trend for 2020:

Third, these numbers reflect the ongoing migration of skilled plaintiffs’ class action lawyers into the wage & hour litigation space. Experienced and able plaintiffs’ class action counsel typically secure better results. Securing initial “first stage” conditional certification – and foisting settlement pressure on an employer – can be done quickly (almost right after the case is filed), with a minimal monetary investment in the case (e.g., no expert support is needed, unlike a motion for class certification in an employment discrimination class action or an ERISA class action), and without significant discovery in accordance with the case law that has developed under 29 U.S.C. § 216(b).

As a result, to the extent litigation of class actions and collective actions by plaintiffs’ lawyers is viewed as an investment of time and money, prosecution of wage & hour lawsuits is a relatively low cost investment, without significant barriers to entry, and with the prospect of immediate returns as compared to other types of workplace class action litigation.

Hence, as compared to employment discrimination and ERISA class actions, FLSA litigation is less difficult or protracted for the plaintiffs’ bar, and more cost-effective and predictable. In terms of their “rate of return,” the plaintiffs’ bar can convert their case filings more readily into certification orders, and create the conditions for opportunistic settlements over shorter periods of time.

The certification statistics for 2020 confirm these factors. Despite the on-set of the COVID-19 pandemic by March of 2020 (and the slowdown in business and closures of courthouses due to safety concerns), the plaintiffs’ bar secured more certification victories than at any time over the past 15 years.

The extent to which Epic Systems will continue to impact wage & hour certification trends remains uncertain. As 2020 reflected, the number of FLSA lawsuits filed in 2020 fell as compared to 2019, along with settlement values, but not to rates altogether different than the filing numbers we saw in 2019 or settlement numbers we saw in 2018, suggesting that the plaintiff’s class action is not losing interest in these suits. To the contrary, the number of rulings issued by federal courts, in spite of the COVID-19 pandemic, suggests that plaintiffs’ counsel are not exiting these cases from the court system either voluntarily or via motions to compel arbitration, before courts have passed on motions for conditional certification. Further, the rate at which courts granted conditional certification in 2020 suggests that arbitration provisions are not getting in the way of these motions and that, instead, plaintiffs are being more selective in filing their cases or in narrowing the groups of employees that they are seeking to represent.

As mentioned above, as the Biden Administration takes office, and particularly if Democrats regain control of the Senate during his term, employers may see new legislative efforts to overturn Epic Systems and eventually may see those efforts gain traction. Their success, however, in altering the force of the Federal Arbitration Act in the workplace, may depend upon future ideological and political dynamics. As a result, we expect that Epic Systems will continue to impact case filing numbers in the near term.

Employment Discrimination & ERISA Certification Trends

Against the backdrop of wage & hour litigation, the rulings in Wal-Mart and Epic Systems fueled more critical thinking and crafting of case theories in employment discrimination and ERISA class action filings in 2020. The Supreme Court’s Rule 23 decisions have had the effect of forcing the plaintiffs’ bar to “re-boot” the architecture of their class action theories. At least one result was the decision in Tyson Foods v. Bouaphakeo, 136 S. Ct. 1036 (2016), in which the U.S. Supreme Court accepted the plaintiffs’ arguments that, in effect, appeared to soften the requirements previously imposed in Wal-Mart for maintaining and proving class claims, at least in wage & hour litigation.

Hence, it is clear that the playbook on Rule 23 strategies is undergoing a continuous process of evolution. The plaintiffs’ class action bar is continually testing ways to navigate around and to wear away the force of these precedents. One work-around is the filing of “smaller” employment discrimination class actions. We have seen  statewide or regional-type classes asserted more often than the type of nationwide mega-case that Wal-Mart discouraged. Plaintiffs’ counsel are being more selective, strategic, and savvy relative to calibrating the focus of their cases and aligning the size of the proposed class to the limits of Rule 23 certification theories.

In essence, at least in the employment discrimination area, the plaintiffs’ litigation playbook is more akin to a strategy of “aim small to secure certification, and if unsuccessful, then miss small.” Plaintiffs seem apt to file these scaled-down class actions in order to test the prevalence of arbitration agreements among putative class members and, depending on the result, to move forward with a limited class of non-signers or to use the threat of undermining the enforceability of the arbitration program to attempt to leverage a settlement prior to obtaining a ruling on the propriety or scope of certification.

In 2020, settlement numbers in employment discrimination class actions skyrocketed, as mentioned above, whereas the number of rulings on motions for class certification dwindled. In 2020, courts issued only 12 rulings on motions for class certification in employment discrimination actions, compared with 15 rulings in 2019. Plaintiffs prevailed in 5 of the 12 rulings, or 42%, in 2020, with 4 of those rulings emanating from the Ninth Circuit.

The rate of success of the plaintiffs’ bar in 2020 on such motions was not appreciably different from 2019. In 2019, plaintiffs won 7 of the 11 rulings, or 63%, on motions for initial certification of class actions in employment discrimination cases, but plaintiffs lost 4 of 4 motions for decertification, for an overall success rate of 46.7%. By comparison, in 2018, plaintiffs won 3 of the 11 rulings on motions for class certification, or 27%, but, in 2017, plaintiffs won 7 of 11 rulings on such motions.

The following map demonstrates the array of certification rulings in Title VII and ADEA discrimination cases:

ERISA Trends

In terms of the ERISA class action litigation scene in 2020, the focus continued to rest on precedents of the U.S. Supreme Court as it shaped and refined the scope of potential liability and defenses in ERISA class actions.

The Wal-Mart decision also has changed the ERISA certification playing field by giving employers more grounds to oppose class certification. The decisions in 2020 show that class certification motions have the best chance of denial in the context of ERISA welfare plans, and ERISA defined contribution pension plans, where individualized notions of liability and damages are prevalent.

While plaintiffs were more successful than employers in litigating certification motions in ERISA class actions, their success rate was on par with previous years. In 2020, plaintiffs won 11 of 16 certification rulings, a success rate of 69%. In 2019, plaintiffs won 11 of 17 certification rulings, a success rate of 65%. By comparison, in 2018 plaintiffs won 11 of 17 certification rulings for similarly success rate of 65%, and in 2017, plaintiffs prevailed in 17 of 22 certification rulings, for a success rate of 77%.

A map illustrating these trends is shown below:

Overall Trends

So what conclusions overall can be drawn on class certification trends in 2020?

In the areas of wage & hour and ERISA claims, in particular, the plaintiffs’ bar is converting their case filings into certification of classes at a high rate. To the extent class certification aids the plaintiffs’ bar in monetizing their lawsuit filings and converting them into class action settlements, the conversion rate is robust.

Whereas class certification for employment discrimination cases (5 motions granted and 7 motions denied in 2020) and in ERISA cases (11 motions granted and 5 motions denied in 2020) showed an approximate 42% to 69% success rate for plaintiffs, the plaintiffs’ success rate factor in wage & hour litigation (with 231 conditional certification motions granted and 43 motions denied) is pronounced.

The following bar graph details the win/loss percentages in each of these substantive areas:

–          a success rate of 42% for certification of employment discrimination class actions (both Title VII and age discrimination cases);

–          a success rate of 69% for certification of ERISA class actions; and,

–          a success rate of 84% for conditional certification of wage & hour collective actions.

The most certification activity in workplace class action litigation is in the wage & hour space. The trend over the past five years in the wage & hour space reflects a steady success rate that ranged from a low of 73% to a high of 84% (with 2020 representing the highest success rate ever) for the plaintiffs’ bar. The positive results are more concentrated in plaintiff-friendly “magnet” jurisdictions where the case law favors workers and presents challenges to employers seeking to block certification.

Comparatively, the trend over the past five years for certification orders is illustrated in the following chart:

While each case is different, and no two class actions or collective actions are identical, these statistics paint the all-too familiar picture that employers have experienced over the last several years. Although case law precedents and defense approaches continue to evolve and generate many good outcomes for employers, courts continue to grant conditional certification motions at high rates.

Whereas overall case filing numbers were down, these figures suggest that the plaintiffs’ bar is exercising more selectivity and restraint when it comes to filing and seeking certification of narrower or more defined groups, thereby contributing to the success rate of the plaintiffs’ bar.

The key statistic and bright spot in 2020 for employers was an increase in the odds of defeating certification in employment discrimination class actions, where plaintiffs succeeded in certifying classes in less than half of the rulings issued during 2020.

Seyfarth Synopsis: In our continuing video blog series outlining the findings in our Annual Workplace Class Action Litigation Report, trend #4 detailed how government enforcement litigation shifted in 2020, with changes representing a significant shift in philosophy and practice. Listen below as Jerry Maatman explains what occurred in the government enforcement world last year and what is apt to happen in 2021.

By Gerald L. Maatman, Jr.

Seyfarth Synopsis: In our continuing coverage of the top trends found in Seyfarth’s 2021 Workplace Class Action Litigation Report, in 2020, government enforcement litigation slowed considerably. Although the value of government enforcement settlements went up, agencies like the EEOC downsized their litigation enforcement programs and brought fewer lawsuits in 2020 than in any year of the past decade. Most significant for employers, during the past year, the EEOC undertook multiple initiatives that reflected a shift away from systemic litigation as a priority.

During 2020 employers saw significant shifts in the EEOC’s enforcement agenda, including a notable shift away from litigation as a one-size-fits-all tool for combatting workplace discrimination. As the EEOC’s enforcement agenda shifted, employers experienced a marked decrease in federal complaints and a marked increase in settlements as the EEOC sought to wind down its litigation docket. These shifts likely resulted from the pro-business stance of the Trump Administration. The EEOC saw considerable leadership turnover at the top as Trump’s nominees for Commissioner slots were finally confirmed on May 3, 2019 (Janet Dhillon, Chair) and September 22, 2020 (Keith Sonderling, Vice Chair, and Andrea Lucas, Commissioner).

Prior to September 2020, the EEOC’s leadership consisted of only three of five Commissioners, including Janet Dhillon, Chair (Republican), Vicki Lipnic (Republican), and Charlotte Burrows (Democrat). Commissioner Lipnic’s term technically expired in July 2020, but she was allowed to stay on through September 2020 so that the Commission would have a quorum and could operate. On September 22, 2020, the Senate confirmed three new Commissioners, two Republicans and one Democrat, for the two vacant seats and the seat formerly held by Lipnic. The Commission must remain bipartisan by law, but these new additions solidified a Republican majority at least until July 2022 when Dhillon’s term expires, despite the result of the 2020 election in flipping the White House from red to blue.

The total number of new lawsuits filed by the EEOC decreased significantly during 2020. The EEOC filed 94 merits lawsuits and seven subpoena enforcement actions, a stark decline compared to the 144 merits lawsuits and eight subpoena enforcement actions filed during 2019. This represented a 35% reduction in total actions commenced by the Commission year over year. Despite the shift in administrations, employers can expect that the EEOC’s majority-Republican leadership will continue to curtail litigation efforts in 2021.

Although the numbers declined, when considered on a percentage basis, the distribution of cases filed in terms of their theories of liability remained largely consistent compared to 2019. Title VII and ADA cases once again comprised the majority of cases filed by the Commission, suggesting that enforcement priorities did not shift dramatically and remained fairly consistent under the Trump Administration. This past year marked the fourth year of the EEOC’s 2017-2021 Strategic Enforcement Plan (“SEP”), which guides enforcement activity. The six enforcement priorities set forth in the SEP include: (1) the elimination of systemic barriers in recruitment and hiring; (2) protection of immigrant, migrant, and other vulnerable workers; (3) addressing emerging and developing issues; (4) enforcing equal pay laws; (5) preserving access to the legal system; and (6) preventing harassment through systemic enforcement and targeted outreach.

The Commission maintains discretion to interpret and pursue these priorities as it deems appropriate. Although the SEP defined priorities, they are broad and apply to an expansive landscape of issues. For example, the EEOC consistently has focused on the protection of lesbian, gay, bisexual, and transgender individuals over the past several years as an emerging and developing issue in the workplace.

The EEOC’s efforts in this area resulted in a body of case law across jurisdictions, culminating in the U.S. Supreme Court’s landmark decision in R.G. & G.R. Funeral Homes, Inc. v. EEOC & Bostock v. Clayton County, Georgia, which held that Title VII prohibits discrimination against gay or transgender employees as a form of sex discrimination. The 6-3 decision authored by Justice Gorsuch represented a significant victory for the EEOC during 2020.

Additionally, during 2020, employers saw a flurry of activity at the EEOC relative to its internal practices and procedures, with the Commission pushing to meet objectives prior to the change in administrations on January 20, 2021. Notably, the EEOC made strides to shift its internal decision-making authority, update its conciliation and mediation procedures, and voluntarily scale back some of its authority.

First, on March 10, 2020, the EEOC released information about a significant internal resolution that reassigned authority for certain high-stakes litigation decisions within the Commission. The resolution reined in many of the powers previously held by the EEOC’s General Counsel and, in turn, the Commission’s various Regional Attorneys, who historically have wielded considerable discretion over the types of lawsuits that they file and the legal positions that they advance. Under the new resolution, the Commissioners – and not the General Counsel (or Regional Attorneys) – will make key litigation decisions concerning systemic litigation and various other matters. According to the resolution, the Commissioners now have exclusive authority over the following:

  • Cases involving an allegation of systemic discrimination or a pattern or practice of discrimination;
  • Cases expected to involve a major expenditure of agency resources, including staffing and staff time, or expenses associated with extensive discovery or expert witnesses;
  • Cases presenting issues on which the Commission has taken a position contrary to precedent in the Circuit in which the case will be filed;
  • Cases presenting issues on which the General Counsel proposes to take a position contrary to precedent in the Circuit in which the case will be filed;
  • Other cases reasonably believed to be appropriate for Commission approval in the judgment of the General Counsel. This category includes, but is not limited to, cases that implicate areas of the law that are not settled and cases that are likely to generate public controversy;
  • All recommendations in favor of Commission participation as amicus curiae; and
  • A minimum of one litigation recommendation from each District Office each fiscal year, including litigation recommendations based on the above criteria.

Even with respect to those cases that do not raise the issues enumerated above, the General Counsel is now obligated to communicate about more garden variety cases with the Chair and, at the Chair’s request, shall consult with the Chair to decide whether those cases should be brought before the Commissioners for a vote. If the Chair does not advise the General Counsel within five business days as to whether a particular case must be submitted to the Commissioners for a vote, the General Counsel retains authority to proceed with a lawsuit on her own initiative.

These changes represent a stunning reduction in the General Counsel’s discretion. For many years, the General Counsel and attorneys in the field appeared to exercise broad control over the types of cases the EEOC would file, the theories of law that it would pursue, and the litigation tactics that it would employ. Because the General Counsel was encouraged to delegate that authority to Regional Attorneys across the country, the result was a sometimes fragmented, district-by-district approach to EEOC enforcement litigation.

Second, on July 7, 2020, the EEOC issued a press release announcing two new six-month pilot programs aimed at increasing voluntary resolutions of discrimination charges via changes to its conciliation and mediation programs. Then, on October 8, 2020, the EEOC released the specifics of a Notice of Proposed Rulemaking (“NPRM”) seeking to make additional changes to the conciliation process. In its NPRM, the EEOC acknowledged that, historically, it elected not to adopt detailed regulations relative to its conciliation efforts based on its belief that retaining flexibility over the conciliation process would “more effectively accomplish its goal of preventing and remediating employment discrimination. Although the Commission’s NPRM makes clear that the Commission still believes that it is important to maintain a flexible approach to conciliation, it also acknowledged that, over the last several years, its conciliation efforts resolved less than half of the charges where a reasonable cause finding was made. Specifically, between fiscal years 2016 and 2019, only 41.23% of the EEOC’s conciliations with employers were successful.

Third, on September 3, 2020, the EEOC issued a rare opinion letter regarding the Commission’s interpretation and enforcement of § 707(a) of Title VII, which authorizes the EEOC to sue employers engaged in a “pattern or practice” of discrimination. The opinion letter addressed two seemingly technical questions, including: (1) whether a pattern or practice claim under § 707(a) requires allegations of violations of § 703 or § 704 of Title VII; and (2) whether the EEOC must satisfy pre-suit requirements such as conciliation before it can bring a § 707 case. In a lengthy discussion, the EEOC ultimately concluded that the answer to both questions is “yes.” Notably, the Commission’s letter first acknowledged that “[t]he Commission, like all agencies, is a ‘creature of statute’ that only has the authority that Congress has given it . . . Therefore, in performing its duties, the Commission must follow the statutory language that Congress has provided.” This language signals a new approach from the Commission that voluntarily limits the EEOC’s authority, particularly relative to claims in pattern or practice suits to only concrete allegations of discrimination.

Fourth, on November 2, 2020, the EEOC held its first public meeting of FY 2021 to consider a proposed memorandum of understanding (“MOU”) between the EEOC, the Department of Labor (“DOL”), and the Department of Justice (“DOJ”) aimed at recommitting to collaboration between the agencies and coordinating efforts to protect civil rights in the workplace. Key provisions of the MOU included strengthening procedures for coordination between the three agencies at the field and headquarters levels, including discussions on enforcement priorities and coordinating on issues like religious liberty, conscious protections, and novel or unique issues and bringing greater efficiencies to the investigation process.

Collectively, these changes represent a significant shift in the EEOC’s philosophy and practice toward a curtailment of its own powers and a shift away from using litigation as the blunt-force instrument of choice. These changes are apt to influence the Commission’s approach into 2021 and beyond.

Although the EEOC’s total litigation filings for 2020 reflected a marked decline, the Commission’s “Agency Financial Report” (“AFR”), which was released in November 2020, touted a surge in recoveries on behalf of employees. The AFR provided a snapshot of FY 2020 performance highlights, including the following:

  • During FY 2020, the EEOC recovered a record amount of $535.4 million on behalf of alleged discrimination victims. By comparison, the EEOC recovered approximately $486 million in FY 2019; approximately $505 million in FY 2018; and approximately $484 million in FY 2017.
  • The amount recovered through mediation, conciliation, and settlement dropped from $354 million in FY 2019 to $333.2 million in FY 2020.
  • Conversely, litigation recoveries increased from $39.1 million in FY 2019 to $106 million in FY 2020, the highest in 16 years. The EEOC credits this surge in litigation recovery to its resolution of 165 lawsuits in FY 2020 and stated that it achieved “favorable results” in approximately 96% of its court resolutions.
  • The Commission reported a reduction of the inventory of pending private sector charges by 3.7% – to 41,951 charges – that now represents the lowest inventory of charges in 14 years.

Further, national origin discrimination has continued to become an increasingly large part of the EEOC’s enforcement agenda. The EEOC has expressed in a number of places that it is concerned about the impact that global phenomena can have on worker relations in the United States. Historically, those concerns have been focused on how global terrorism and unrest in the Middle East could lead to discrimination against Muslim or Sikh employees or those of Middle Eastern or South Asian descent, or how illegal immigration issues could give rise to discrimination against Mexican or South and Central American workers. The COVID-19 pandemic could change this focus somewhat moving forward, as the outbreak of a deadly pandemic that had its origin in China has given rise to increased concerns about national origin discrimination against Asian Americans, as cautioned by EEOC Chair Dhillon in a statement issued early during the COVID-19 pandemic.

On the DOL front, like many agencies, its agenda this year was occupied with issues relating to the COVID-19 pandemic. The DOL was busy enforcing and issuing guidance on implementation of the Families First Coronavirus Response Act, with the Wage & Hour Division consistently updating FAQ guidance on the Act. The DOL also issued final “temporary” regulations interpreting the FCRA. Despite the COVID-19 detour, the DOL accomplished many of its other objectives prior to the 2020 election. The agency announced new joint employer and independent contractor rules, discussed above; issued a final rule that allows employers to pay bonuses or other incentive-based pay to salaried, non-exempt employees whose hours vary from week to week; issued joint guidance with the IRS providing that insurers can allow the newly jobless to sign up for a coverage extension known as the COBRA, at any time up to 60 days after the national emergency declaration for COVID-19 is lifted; and announced it would no longer seek “double damages” in FLSA actions where there is no clear evidence of bad faith and willfulness or where the employer has no prior history of violations.

Finally, the National Labor Relations Board (“NLRB”) continued its trend toward more conservative views of labor laws in 2020. It ruled that an employer may discipline workers for making profane, abusive, or offensive statements, so long as the employer’s action is not based on specific anti-union animus, reinstating the previously-reversed Wright Line analysis, and it issued a final rule providing that an entity may be considered a joint employer of a separate employer’s employees only if the two share or co-determine employees’ essential terms and conditions of employment, which are exclusively defined as wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction. Employers can anticipate, however, that 2021 will look markedly different, as the Biden Administration has reiterated that supporting organized labor will sit atop of the agenda. The Board is currently operating with a vacant seat with a term running through August 2023, and the General Counsel’s term expires in one year. Before any significant change can happen at the NLRB, the Biden Administration will need to fill the two open seats, necessitating additional changes in leadership.

By Gerald L. Maatman, Jr., Thomas E. Ahlering, Paul Yovanic, Jr.

Seyfarth Synopsis: The New York state legislature recently introduced a standalone biometric information privacy bill, AB 27, that mirrors Illinois’ Biometric Information Privacy Act (740 ILCS § 14/1 et seq., “BIPA”), which has spawned thousands of class actions in the Land of Lincoln. If enacted, The New York bill would become only the second biometric privacy act in the United States to provide a private right of action and plaintiffs’ attorneys’ fees for successful litigants. This represents a significant development for companies and employers operating in New York in light of the explosion of class action litigation over workplace privacy issues.

Details Of New York’s Proposed Legislation

What can otherwise be characterized as BIPA 2.0, New York proposed and introduced its own “Biometric Privacy Act” on January 6, 2021.  New York’s proposed “Biometric Privacy Act” is a carbon copy of the Illinois BIPA, including identical definitions of both biometric identifiers and biometric information. The proposed law prohibits private entities from capturing, collecting, or storing a person’s biometrics without first implementing a policy and obtaining written consent. Most notably, the proposed bill provides for identical remedies to BIPA, whereas an aggrieved person under the proposed bill will be afforded a private right of action with the ability to recover $1,000 for each negligent violation, $5,000 for each intentional or reckless violation, and reasonable attorneys’ fees and costs.

Implications For Companies

Companies that are already familiar with the Illinois BIPA are undoubtedly aware of the risks that the proposed New York biometric privacy bill poses. While the BIPA was enacted in 2010, Illinois has seen an explosion in class action litigation over the past few years brought by employees and consumers alleging that their biometric data was improperly collected for timekeeping, security, and consumer transactions. In fact, between 2015 and 2020 alone, there were over 1,000 Illinois BIPA class action complaints filed across the United States, with additional new filings continuing to be initiated every day.

It remains to be seen if New York’s biometric privacy bill will pass as drafted. However, if enacted as it is currently drafted, companies in New York can also expect to face an onslaught of biometric privacy litigation. Compliance is key, and there no better time to think about your company’s biometric privacy compliance than right now. Companies with New York operations that are utilizing anything that could be considered biometrics, for any reason, should consider audit their practices, policies, and procedures to avoid potentially costly exposure in the event that the bill ultimately passed. Businesses with compliance questions should contact a member of Seyfarth Shaw’s Biometric Privacy Compliance & Litigation Practice Group.

While this proposed bill is only days old, we will provide immediate updates on its progress when available.

By: Gerald L. Maatman, Jr., Christopher DeGroff, Matthew J. Gagnon, and Alex S. Oxyer

Seyfarth Synopsis:  On January 8, 2021, the EEOC unveiled a new webpage explaining the administrative and litigation tools used by the Commission to identify and pursue systemic discriminatory practices. This new guidance is the latest in a number of high priority developments at the EEOC this year and is an absolute must-read for employers.

As part of its recent shift to make its processes more transparent to employers and the public, the EEOC’s new webpage provides insights about how the Commission approaches systemic discrimination enforcement efforts. Historically, the EEOC described systemic cases as pattern or practice cases – also often called systemic cases (but not to be confused with Rule 23 class actions, since Rule 23 does not apply to lawsuits brought by the EEOC) – where the discrimination has a significant impact on an industry, profession, company, or geographic location. Over the past several years, the EEOC has taken steps to improve its nationwide approach to addressing systemic issues.

Now, for the first time in several years, this new webpage provides a specific statement about how the Commission defines “systemic” and its approach to addressing such issues. Specifically, the webpage provides background on how the Commission determines that systemic enforcement is effective, explains how the EEOC decides what qualifies as systemic discrimination, and outlines the Commission’s process for initiating and conducting a systemic case.

In the press release announcing the webpage, EEOC Chair Janet Dhillon stated that “[t]he EEOC is strongly committed to making our processes fully transparent and useful to the public,” and that “[s]ystemic enforcement is an important mechanism the Commission uses to remedy discrimination that has broad impacts on industries, professions, or geographic areas.  It is vital that the public knows how we use this tool.”

Implications For Employers

The EEOC’s new webpage is not only helpful to employers, but also is likely a way for the Commission to instruct its field staff now and in the future as to how to identify and address systemic discrimination. The EEOC’s latest shift toward transparency will likely improve consistency among the EEOC’s field offices and provides guidance for employers who are dealing with the Commission on these issues.

The ongoing changes at the Commission are a must-watch for employers as the EEOC continues in its 2021 fiscal year, and we will be tracking the latest developments here.

Seyfarth Synopsis: In our continuing video blog series on the finding of our 2021 Workplace Class Action Litigation Report, somewhat unexpectedly, the aggregate monetary value of workplace class action settlements increased in 2020, despite the global pandemic and its impacts on the economy and business operations. In the video below, Jerry Maatman shares his observations on the settlements across all areas of workplace class actions in 2020, and what employers should expect as we move into 2021.

By Gerald L. Maatman, Jr.

Seyfarth Synopsis: In our continuing series of discussion points from the 2021 Workplace Class Action Litigation Report, somewhat counter-intuitively, the aggregate monetary value of workplace class action settlements increased in 2020, as settlement numbers went up and plaintiffs’ lawyers and government enforcement actions monetarized their claims at higher rates. Many employers and commentators alike expected the pandemic to depress the size and pace of settlements in the new “cash is king” approach to the business cycle. Instead, workplace class action litigation defied the odds.

As measured by the top ten largest case resolutions in various workplace class action categories, overall settlement numbers increased in 2020, as compared to the prior two years. After settlement numbers reached an all-time high in 2017, those numbers fell dramatically in 2018, and then leveled off in 2019.

Although many employers and commentators alike expected the pandemic to depress the size and pace of settlements even further as businesses sought to conserve cash in the wake of the COVID-19 pandemic, workplace class action settlements defied expectations.

The numbers show that, in 2020, the plaintiffs’ bar was successful in monetizing their class action filings at a higher level than the past two years, perhaps signaling the beginning of an upward climb toward the numbers we saw in 2016 and 2017.

These trends harken back to the U.S. Supreme Court’s 2011 decision in Wal-Mart, Inc. v. Dukes, 564 U.S. 338 (2011). By tightening Rule 23 standards and raising the bar for class certification, Wal-Mart made it more difficult for plaintiffs to certify class actions and, as a result, more difficult to convert their class action filings into substantial settlements. These barriers became more formidable in 2018 with the Supreme Court’s ruling in Epic Systems v. Lewis, which upheld the validity of class action waivers in mandatory workplace arbitration agreements.

The “Wal-Mart/Epic Systems” phenomenon provided employers a “one-two punch” relative to their defense strategies that continues to impact the contours of class action litigation in 2020. To that end, federal and state courts cited Wal-Mart in 673 rulings in 2020, and they cited Epic Systems in 189 decisions by year’s end.

This past year, the plaintiffs’ bar continued to identify and develop work-arounds that helped to force the settlement of high-value class actions in multiple areas. Considering all types of workplace class actions, settlement numbers in 2020 totaled $1.58 billion, an increase compared to settlements in 2019, which totaled $1.34 billion, and from 2018, when they totaled $1.32 billion. These totals, however, remain significantly lower than their high-water mark in 2017, when such settlements topped $2.72 billion, and slightly lower than 2016, when such settlements totaled $1.75 billion. The following graphic shows this trend:

In terms of the story behind the numbers, the breakouts by types of workplace class action settlements are instructive.

In 2020, we saw a significant upward trend regarding the settlement values of employment discrimination claims, government enforcement litigation, and a slight upward trend regarding ERISA class actions. In contrast, we saw significant decreases across-the-board for resolutions of class actions involving wage & hour claims and private statutory claims.

The results in these categories are illustrated by the following chart for 2020 settlement numbers:

By type of case, settlement values in employment discrimination class actions and government enforcement cases experienced the most significant increases.

Employment discrimination class action settlements showed a significant increase in 2020. The top ten settlements totaled $422.68 million, as compared to $139.2 million in 2019, $216.09 million in 2018, and $293.5 million in 2017. The comparison of the settlement figures with previous settlement activity over the last decade is illustrated in the following chart:

In 2020, the value of the top ten largest employment discrimination class action settlements of $422.68 million was the highest figure reached since we began tracking numbers, and $76.28 million higher than the next highest year recorded (2010).

As such, 2020 represents the reversal of a trend that started in 2011 (after Wal-Mart was decided) that kept the value of the top ten settlements under $300 million in each of the subsequent nine years.

Relatedly, the top ten settlements in government enforcement litigation experienced a sharp upward turn in 2020, as it increased to $241.0 million, a significant jump from the $57.52 million we saw in 2019 and from the $126.7 million recorded in 2018. Although the numbers did not approach the 2017 high-water mark of $485.25 million, they outpaced the numbers lodged in every other year since 2012.

This trend is illustrated by the following chart of settlements from 2012 to 2020:

ERISA class action settlements rose slightly in 2020. The top ten settlements totaled $380.10 million, which topped the 2019 total of $376.35 million, as well as the 2018 total of $313.4 million. ERISA settlements in 2020, however, remained well below prior years, including the $1.31 billion we saw in 2014, the $926.5 million we recorded in 2015, the $807 million we saw in 2016, and the $927.8 million we logged in 2017. Given that ERISA class action settlements over the four-year period from 2014 through 2017 averaged $992.93 million, 2020 continues a trend toward a lower conversion rate for the plaintiffs’ bar.

This trend is illustrated by the following chart of settlements from 2012 to 2020:

The upward year-over-year trend did not hold for wage & hour class action settlements. The value of those settlements in 2020 fell off significantly from the previous year. In 2020, the value of the top ten wage & hour settlements was $294.60 million, compared with $449.05 million in 2019.

Although a significant decrease from 2019, the value held slightly above the lowest levels of the past decade, including above four of the past eight years with values of $292 million (2012), $248.45 million (2013), $215.3 million (2014), and $253.5 million (2018).

On a comparative basis, the top 10 settlements in 2020 likewise fell well short of the spikes we saw in the other four of the previous eight years, with values of $463.6 million (2015), $695.5 million (2016), $525 million (2017), and $449.05 million (2019).

When combined, however, the top 10 wage & hour settlements for the three-year period of 2015, 2016, and 2017 totaled over $1.68 billion. Adding 2018 and 2019 settlements, corporate America saw over $2.386 billion devoted to settling the top 10 wage & hour settlements over that five-year period.

As the impact of the 2018 ruling in Epic Systems continues to provide defenses for businesses inclined to adopt mandatory workplace arbitration programs with class action waivers, and cases filed prior to such adoption continue to work their way out of the pipeline, we could see settlement numbers continue to follow a downward trajectory in 2021.

The top ten settlements in the private plaintiff statutory class action category (e.g., cases brought for breach of contract for employee benefits, workplace antitrust laws, or statutes such as the Fair Credit Reporting Act or the Worker Adjustment and Retraining Notification Act) likewise fell off in 2020. The settlements totaled $244.55 million, which represented a significant decrease from 2019 and the continuation of a downward year-over-year trend that began in 2018. In 2017, such settlements totaled $487.28 million; in 2018, they totaled $411.15 million; and in 2019, they totaled $319.65 million.

The following chart tracks these figures:

Settlement trends in workplace class action litigation are impacted by many factors. In the coming year, settlement activity is apt to be influenced by developing case law interpreting U.S. Supreme Court rulings such as Epic Systems, the Biden Administration’s labor and employment enforcement policies, case filing trends of the plaintiffs’ class action bar, and class certification rulings.