light bulb.bmpBy Tracy Billows, Jonathan C. Grey, and David Kadue

As we have noted in previous blog postings (read here and here) the plaintiffs’ class action bar continues to look for ways to work around the U.S. Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011). A prime example of these tactics is McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 672 F.3d 482 (7th Cir. 2012), which we analyzed in several earlier posts. While we continue to monitor this trend and assess the best defense strategies for combating plaintiffs’ “new re-booting theories,” we suggest employers consider a “new tool” themselves  – enhancing workplace and HR policies based on the lessons learned from Wal-Mart and McReynolds – to maximize their defense prospects and make class certification more difficult for plaintiffs. 

Brief Recap Of Dukes And McReynolds

Previously, we wrote extensively about the broad implications of Wal-Mart and McReynolds on workplace class actions. To briefly recap, in Wal-Mart, where the only “company-wide” policies forbade discrimination and delegated employment decisions to local managers, the Supreme Court found that the plaintiffs lacked any ability to establish commonality and noted that a class action would be unmanageable given the lack of a uniform policy with a discriminatory impact. Conversely, in McReynolds, where company policies permitted brokers to work in “teams” and suggested success-based criteria for distributing departing brokers’ accounts, the Seventh Circuit found a class action could be manageable. The Seventh Circuit in McReynolds distinguished the lack of a “company-wide” policy in Wal-Mart by finding that Merrill Lynch had instituted “company-wide” policies that allegedly created an adverse impact. The Seventh Circuit reasoned that Merrill Lynch’s policies could cause racial discrimination, might not be justified by business necessity, and accordingly, determined class certification was warranted.

Employing Proactive Strategies

Rather than waiting to attempt to defeat a class action by analogizing it to Wal-Mart or distinguishing it from McReynolds, employers can take proactive steps to thwart a potential class action. Employers should audit workplace policies and develop practices with the lessons of Wal-Mart and McReynolds in mind. This process entails the review of generally applicable workplace policies, analyzing the potential for an adverse impact on protected classes, determining whether there exists a business necessity for each policy, and modifying policies as appropriate. Employers also should ensure they have effective corporate equal employment opportunity policies, which include consequences for managers’ failure to adhere to them. This may also help preclude a finding of a common policy of discrimination. 

Employers also should look beyond the usual suspects – hiring, pay, and promotion practices — and examine  practices regarding the use of teams to staff projects and work, mentoring or coaching programs,  management or executive training programs, and other practices that may affect an employee’s advancement opportunities. These kinds of practices are likely to be challenged by plaintiffs going forward because they often can be identified as allegedly affecting protected groups. Moreover, they tend to influence pay and promotions decisions. Other hot button policies include those that are too complex or costly for managers to follow, policies and practices that adversely affect employee morale, and those that are not uniformly enforced. Modifying these policies can help employers better address these hot button issues before they turn into the next class action lawsuit.      

Action Steps For Employers

Given the likelihood of the continued emphasis of the plaintiffs’ class action bar on finding approaches to litigating employment class actions, here is a short checklist of specific action items for employers to take related to the policies and practices that will likely form the basis of any such lawsuit: 

  • Review each Human Resources policy and practice to determine whether they have an adverse impact on any protected group.
  • Review and audit other corporate policies that affect employee work opportunities, pay, and advancement opportunities.
  • Ensure implementation and enforcement of the company’s EEO policy from top down.
  • Provide regular training and communication regarding policies, including those regarding equal employment opportunities, non-discrimination, anti-harassment, and career opportunities.
  • Ensure effective complaint and “open door” policies and procedures are in place.

Proactively taking these steps not only will bolster legal compliance, but also give employers a significant edge in fending off the next class action.