By Gerlad L. Maatman, Jr.

Seyfarth Synopsis: As measured by the top 10 largest case resolutions in various workplace class action categories, overall settlement numbers skyrocketed in 2021 to an all-time high. The plaintiffs’ bar and government enforcement attorneys obtained significant settlements in a wide range of areas in 2021, and the overall “top ten” settlement values in 2021 in workplace class actions increased from those in 2020 in every area except for employment discrimination and government-initiated enforcement actions. For the first time ever, aggregate class action settlement recoveries in all categories exceeded the $3.19 billion threshold.

Although many employers and commentators alike expected the continuing impact of the pandemic to depress the size and slow the pace of settlements, workplace class action settlements defied expectations, and the plaintiffs’ bar was successful in converting case filings into significant settlement numbers at higher levels during the two years of the pandemic than during the two preceding years. After settlement numbers reached a high point in 2017, those numbers fell dramatically in 2018, and then leveled off in 2019. In 2020, the plaintiffs’ bar was successful in monetizing their class action filings at a higher level, signaling the beginning of an upward climb.

The momentum continued in 2021, as class action settlement recoveries reached a new high.

This past year, the plaintiffs’ bar drove the settlement of high-value class actions in multiple areas. Considering all types of workplace class actions, settlement numbers in 2021 totaled more than $3.19 billion, an increase compared to 2020, which totaled $1.58 billion, and from 2019, which totaled 1.34 billion. The 2021 totals exceeded the previous high-water mark reached in 2017, when such settlements topped $2.72 billion, setting a new benchmark. The following graphic shows this trend:

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

In 2021, employers saw a monumental upward swing in the settlement values of wage & hour claims, ERISA class actions, and private statutory claims. In contrast, corporate America saw significant decreases across-the-board for resolutions of class actions involving employment discrimination claims and government enforcement litigation.

The following chart illustrates the overall results in these categories for 2021 settlement numbers:

By type of case, settlement values in wage & hour claims, ERISA class actions, and private statutory cases experienced the most significant increases.

On the wage & hour front, the value of the top 10 wage & hour class action settlements ballooned in 2021 to $641.3 million. In 2020, the value of those settlements fell off significantly from the previous year. In 2020, the value of the top 10 wage & hour settlements was $294.60 million, compared with $449.05 million in 2019.

In 2021, the value of the top 10 wage & hours class action settlements made a resurgence to a number higher than the number in any year of the past decade aside from 2016. The 2021 value of $641.3 million held slightly lower than the high water mark reached in 2016 ($695.5 million) but otherwise exceeded every other year of the past decade, including 2020 ($294.6 million), 2019 ($449.05 million), 2018 ($253.5 million), 2017 ($525 million), 2015 ($463.6 million), 2014 ($215.3 million), 2013 ($248.45 million), and 2012 ($292 million).

Considering the trend starting in 2015, aside from dips in 2018 and 2020, the value of the top 10 wage & hour settlements exceeded $400 million in every year, for an adjusted five-year average of $537.43 million, or an overall seven-year average of $462.18 million. Adding the numbers, corporate America saw over $3.235 billion devoted to settling the top 10 wage & hour settlements over that seven-year period.

As the plaintiffs’ class action bar continues to find avenues to avoid the impact of the 2018 ruling in Epic Systems on businesses inclined to adopt mandatory workplace arbitration programs with class action waivers, and as cases subject to that precedent continue to work their way out of the pipeline, we anticipate that settlement numbers will continue to climb in 2022.

The settlement value of the top 10 ERISA class actions also climbed in 2021. The top 10 settlements totaled $411.05 million, an increase over the 2020 total of $380.10 million as well as the 2019 total of $376.35 million and the 2018 total of $313.40 million. ERISA settlements in 2021 climbed back closer to the levels employers saw from 2014 to 2017, during which period settlements totaled $1.31 billion (2014), $926.5 million (2015), $807.4 million (2016), and $927.8 million (2017), for an average over the four-year period from 2014 through 2017 of $992.93 million.

This trend is illustrated by the following chart of settlements from 2013 to 2021:

The top 10 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) skyrocketed in 2021 to a new high. The settlements totaled $1.671 billion, which represents a significant increase over every year from 2016 forward and a reversal of a downward year-over-year trend that began in 2018. The previous high water mark, set in 2017, was $487.28 million. In 2018, settlements tapered to $411.15 million, followed by $319.65 million in 2019, and $244.55 in 2020.

The following chart tracks these figures:

Employment discrimination class action settlements, on the other hand, showed a decrease in 2021, as compared to 2020. In 2021, the top 10 settlements totaled $323.45 million, as compared to $422.68 million in 2020. In 2020, the value of the top 10 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).

While lower than the levels employers saw in 2020, the 2021 settlement numbers were significantly higher than previous years, including 2015 ($295.57 million) and 2017 ($293.5 million), and greatly exceeded those in 2012 ($48.65 million), 2013 ($234.1 million), 2014 ($227.93 million), 2016 ($79.81 million), 2018 ($216.09 million), and 2019 ($139.2 million). In fact, the top 10 settlements in 2021 of $323.45 million were higher than the average year-over-year value of the top 10 settlements from 2012 to 2020 of $217.5 million.

The comparison of the settlement figures with previous settlement activity over the last decade is illustrated in the following chart:

Relatedly, the top 10 settlements in government enforcement litigation experienced a downward turn in 2021, as they decreased to a total of $146.38 million.

In 2020, those settlements totaled $241.0 million, a significant jump from the $57.52 million employers saw in 2019 and from the $126.7 million recorded in 2018. Thus, although the numbers decreased in 2021, they outpaced the numbers lodged in 2014, 2015, 2016, and 2019 and fell closer to the average year-over-year value of the top 10 settlements from 2012 to 2020 of $168.82 million.

This trend is illustrated by the following chart of settlements from 2013 to 2021:

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, case filing trends of the plaintiffs’ class action bar, the Biden Administration’s labor and employment enforcement policies, and class certification rulings.