By Gerald L. Maatman, Jr.

Seyfarth Synopsis: Seyfarth’s 17th Annual Workplace Class Action Litigation Report analyzes 1,548 rulings and is our most comprehensive Report ever at 850 pages.

Click here to access the microsite featuring all the Report highlights. You can read about the five major trends of the past year, order your copy of the eBook, and download Chapters 1 and 2 on the 2021 Executive Summary and key class action settlements.

The Report has become the “go to” research and resource guide for businesses and their corporate counsel facing complex litigation. We are humbled and honored by the recent review of our 2020 Annual Workplace Class Action Litigation Report by Employment Practices Liability Consultant Magazine (“EPLiC”) – the review is here. EPLiC said: “The Report is a must-have resource for legal research and in-depth analysis of employment-related class action litigation. Anyone who practices in this area, whether as a corporate counsel, a private attorney, a business executive, a risk manager, an underwriter, a consultant, or a broker, cannot afford to be without it. Importantly, the Report is the only publication of its kind in the United States. It is the sole compendium that analyzes workplace class actions from ‘A to Z.’ In short it is ‘the bible’ for class action legal practitioners, corporate counsel, employment practices liability insurers, and anyone who works in related areas.”

The 2021 Report analyzes rulings from all state and federal courts – including private plaintiff class actions and collective actions, and government enforcement actions –  in the substantive areas of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, and the Class Action Fairness Act of 2005. It also features chapters on EEOC pattern or practice rulings, state law class certification decisions, and non-workplace class action rulings that impact employers. The Report also analyzes the leading class action settlements for 2020 for employment discrimination, wage & hour, ERISA class actions, and statutory workplace laws, as well as settlements of government enforcement actions, both with respect to monetary values and injunctive relief provisions.

We hope our loyal blog readers will enjoy it!

Executive Summary

Over the past decade, the plaintiffs’ bar has escalated the prosecution of workplace class action litigation. As the workplace class action litigation landscape has expanded, the risks have grown exponentially, and the defense of class action litigation has transformed. In this unique year of COVID-19, this trend has accelerated.

Today, workplace class actions remain at the top of the list of challenges that keep business leaders up at night. Whereas an adverse judgment has the potential to bankrupt a business, adverse publicity from a threatened or ongoing class action has the potential to eviscerate market share. At the same time, negotiated resolutions bring the potential for “copy-cat” class actions and “follow on” claims, whereby multiple groups of plaintiffs’ lawyers create a domino effect of litigation filings that challenge corporate policies and practices in numerous jurisdictions at the same time or in succession. Hence, workplace class actions can impair a corporation’s business operations, jeopardize the careers of senior management, and cost millions of dollars to defend.

For these reasons, the plaintiffs’ bar has grown in numbers and shifted tactics to attempt to capitalize on such potentialities. Skilled plaintiffs’ class action lawyers and governmental enforcement litigators are continuing to develop new theories and approaches to the successful prosecution of complex workplace litigation and government enforcement lawsuits. Rulings by federal and state courts are continually adding to this patchwork quilt of compliance problems and litigation management issues. As a result, managing and combating these risks commands an evolving and strategic approach.

The events of the past year demonstrate that the array of problems facing businesses are continuing to evolve and become more complex. The COVID-19 pandemic created new challenges and new laws, which led to new types of workplace issues, new remote-work challenges, and new class theories that are likely to become part of the fabric of complex workplace litigation for years to come.

As the business-friendly policies of the Trump Administration gave way to a reduced emphasis on governmental enforcement litigation pursued by the U.S. Equal Employment Commission (“EEOC”) and other federal agencies, the plaintiffs’ class action bar filled the void. They continued aggressively to pursue and to certify class and collective actions in record numbers, particularly in the wage & hour space.

Adding to this mosaic of challenges in 2021 is the coming change as the White House flips from red to blue and the incoming Biden Administration commits to a renewed focus on workers’ rights. Employers should anticipate that, while leadership of the EEOC will remain in place through the short term, the Biden Administration will bring policy changes on other fronts that may take shape through legislative efforts, agency rule-making, and enforcement litigation.

Contrary to the pro-business approach of the Trump Administration, many of these efforts may be intended to expand the rights, remedies, and procedural avenues available to workers and, as a result, expand workplace class action litigation. As we move into 2021 and beyond, employers should expect changes that will represent stark reversals in policy and have a cascading impact on private class action litigation.

The combination of these factors will challenge businesses to integrate their litigation and risk mitigation strategies to navigate these exposures. While predictions about the future of workplace class action litigation may cover a wide array of potential outcomes, one sure bet is that the plaintiffs’ class action bar will continue to evolve and adapt to changes in legislation, agency rule-making, and case law precedents. As a result, class action litigation will remain fluid and dynamic, and corporate America will continue to face new litigation challenges.

Key Trends Of The Last Year

An overview of workplace class action litigation developments in 2020 reveals five key trends.

First, the COVID-19 pandemic had a significant impact on all aspects of life in 2020. Its impact extended to the legal system in general and workplace class actions in particular. As state and local governments responded to the COVID-19 threat, many employers moved their employees to tele-work or work-from-home arrangements, many laid off or furloughed workers, and many businesses shut down or postponed critical operations. The pace of court filings, however, did not match this trend as the plaintiffs’ bar filed a slew of COVID-19-related class actions. The pandemic spiked class actions (of all varieties) and litigation over all types of workplace issues. As the pandemic took hold, the plaintiffs’ bar retooled their class action theories to match. As businesses scrambled to confront the realities of stay-at-home and closure orders, their actions drew claims that, for instance, lay-offs caused an unintended disparate impact on protected groups or failed to comply with WARN Act requirements. As businesses rushed to adopt safety requirements, their actions drew claims that they failed to pay minimum wage or overtime for compensable work hours, failed properly to reimburse employee expenses, failed to provide leave required under the patchwork of state and federal laws enacted in response to the pandemic, or failed to go far enough in protecting workers from COVID-19. Employers are apt to see these workplace class actions expand and morph as businesses restart operations in the wake of COVID-19.

Second, 2020 signaled that change is the new normal. As many pro-business precedents continued to roll out and take hold in 2020, voters elected to turn the White House from red to blue and, as a result, likely precipitated changes in numerous areas that will expand worker rights. The U.S. Supreme Court’s transformative ruling in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018), continued to profoundly impact the prosecution and defense of workplace class actions in 2020. Epic Systems reaffirmed that the Federal Arbitration Act requires courts to enforce agreements to arbitrate according to their terms, including mandatory agreements with terms providing for individual proceedings and class action waivers. During 2020, Epic Systems continued to shift class action litigation dynamics in critical ways as it led to more front-end attacks on proposed class and collective actions and, as the result of such attacks, led to the defense bar dismantling more workplace class and collective actions by fracturing those proceedings and diverting them into individual arbitrations. The past year demonstrated that change is a constant, however, and, as the Biden Administration takes office, advocates for workers and labor may ramp up their activities and efforts to shift this landscape. If Democrats regain control of the Senate during the Biden Administration, employers may see new legislative efforts to overturn the Epic Systems regime and eventually may see those efforts gain traction and succeed in altering the force of the Federal Arbitration Act in the workplace. Along with the arbitration landscape, the shift in Administrations is likely to bring increased regulation of businesses, renewed enforcement efforts, and policy changes at the agency level that will result in efforts to abandon or overturn pro-business rules of the Trump Administration.

Third, somewhat counterintuitively, 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. The numbers show that the plaintiffs’ bar was successful in converting case filings into significant settlement numbers at higher rates than the past two years. After settlement numbers reached an all-time high in 2017, they plummeted to their lowest level ever in 2018, before experiencing a mild recovery in 2019. This past year, settlement numbers continued their upward trend in several areas, signaling a return to prominence of these bet-the-company cases.

Fourth, 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. First, on February 4, 2020, Chair Janel Dhillon announced five priorities for 2020, none of which included a systemic litigation focus, and reiterated that litigation is “truly a last resort” for the Commission. Second, on March 10, 2020, the EEOC released its Resolution Concerning the Commission’s Authority to Commence or Intervene in Litigation wherein, in short, it removed authority over EEOC litigation activities from the General Counsel and reassigned the authority to commence or intervene in systemic discrimination litigation solely to the Commissioners. Third, on October 8, 2020, the EEOC released a notice of proposed rule-making that overhauled the conciliation process with the goal of improving its transparency and, thus, its overall effectiveness. The agency’s filings over the past year reflect this trend and a continued shift away from systemic litigation.

Fifth, wage & hour litigation remained the sweet spot for the plaintiffs’ class action bar. 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. Further, while evolving case law precedents and new defense approaches resulted in many good outcomes for employers opposing class and collective action certification requests in 2020, 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. Despite the unprecedented pandemic-related court closures, the overall number of rulings increased in 2020, and plaintiffs prevailed on those first-stage motions at an unprecedented rate.

Implications For Employers

In the ever-changing economy and patchwork quilt of laws and regulations, corporations face new, unique, and challenging litigation risks and legal compliance problems.

Adding to this challenge, the one constant in workplace class action litigation is change. More than any other year in recent memory, 2020 was a year of great change, inside and outside of the workplace. As these issues play out in 2021, additional chapters in the class action playbook will be written.

The private plaintiffs’ bar are apt to be equally, if not more, aggressive in 2021 in bringing class action and collective action litigation against employers. They are likely to be aided by new worker-friendly rulemaking emanating from agencies within the executive branch.

These novel challenges demand a shift of thinking in the way companies formulate their strategies. As class actions and collective actions are a pervasive aspect of litigation in Corporate America, defending and defeating this type of litigation is a top priority for corporate counsel. Identifying, addressing, and remediating class action vulnerabilities, therefore, deserves a place at the top of corporate counsel’s priorities list for 2021.