Seyfarth Synopsis: Seyfarth’s 18th Annual Workplace Class Action Litigation Report analyzes 1,607 rulings and is our most comprehensive Report ever at over 840 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 2022 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 2021 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.” Further, the article noted that “No practitioner who deals with employment claims, whether as an underwriter, broker, risk manager, consultant, or attorney should be without it.”
EPLic stated: “The encyclopedic . . . Seyfarth Shaw Annual Workplace Class Action Litigation Report insightfully examines and analyzes an array of class action decisions. In addition, the federal cases examined in the Report are indexed by federal circuit – an invaluable feature that further enhances the Report’s utility. The Report is also available in e-Book format and is fully searchable.”
The 2022 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 2021 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!
Over the past decade, workplace class action litigation has exploded relative to its prevalence and complexity. The class action mechanism provides skilled plaintiffs’ lawyers a tool to attempt to inflate the size and risk of litigation exponentially. The plaintiffs’ class action bar has seized on and expanded its use of this tool to grow its practice and has adopted an array of tactics to command and build increasing pressure and leverage.
Today, workplace class actions remain at the top of the list of challenges that business leaders face. An adverse judgment in a class action has the potential to bankrupt a company. Adverse publicity from a threatened or ongoing class action has the potential to eviscerate good will and market share. At the same time, negotiated resolutions have the potential to spawn copy-cat class actions and follow-on claims from multiple groups of plaintiffs’ lawyers who challenge corporate policies and practices in numerous jurisdictions at the same time or in succession. Compounding these risks, federal and state legislatures and administrative agencies continually add to a patchwork quilt of compliance challenges that shift and change with each administration, thereby bringing increased unpredictability.
Ever-attuned to the challenges facing business leaders, the plaintiffs’ class action bar has leveraged these risks into increasingly large pay-outs. Skilled plaintiffs’ class action lawyers and governmental enforcement litigators have continued to develop new theories and approaches to the successful prosecution of complex workplace litigation and enforcement lawsuits and have continued to convert the size and uncertainty of such litigation into settlements at increasing rates. This phenomenon was manifest in 2021 as the aggregate value of workplace class action settlements ballooned to an all-time high.
As a result, managing and combating workplace class action threats commands an evolving and strategic approach. The events of the past year demonstrate that the array of problems facing businesses are continuing to change and to become more complex. During 2021, the COVID-19 pandemic continued to inspire new laws and regulations, which led to new types of workplace issues and new class theories that are likely to influence the fabric of complex workplace litigation for years to come. The COVID-19 “return to work” effort, remote and hybrid work arrangements, and vaccination mandates spawned new challenges and new class action risks.
The impact of the pro-worker policies of the Biden Administration also took hold over the past year as the agencies under its charge effectively reversed many of the pro-business rules adopted by the Trump Administration. The Biden Administration rolled out policy changes that are continuing to take shape through executive orders, legislative efforts, agency rulemaking, and enforcement litigation. Contrary to the pro-business approach of the Trump Administration, many of these efforts expanded the rights, remedies, and procedural avenues available to workers and government enforcement agencies, and created an array of litigation and compliance challenges for businesses.
As we move into 2022 and beyond, employers should expect that the changing workplace, coupled with these stark reversals in policy, will expand enforcement efforts and have a cascading impact on private class action litigation. The combination of these factors presents increasing challenges for businesses to integrate their risk mitigation and litigation 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 rulemaking, 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 in the year to come.
An overview of workplace class action litigation developments in 2021 reveals five key trends.
Blockbuster Settlement Numbers
First, the aggregate monetary value of workplace class action settlements exploded in 2021 to an all-time high, as plaintiffs’ lawyers and government enforcement agencies monetarized their claims at the highest values we have ever tracked. Many employers and commentators alike expected the pandemic to depress the size and pace of settlements. Instead, the numbers show that the plaintiffs’ bar was successful in converting case filings into significant settlement numbers at higher levels during the pandemic than in any of the preceding years. After settlement numbers reached a high point in 2017, they plummeted to their lowest level ever in 2018 before experiencing a mild recovery in 2019. In 2020, settlement numbers continued their upward trend in several areas, signaling a return to prominence of these bet-the-company cases. This momentum continued in 2021, as class action settlement recoveries reached a new threshold. The top 10 settlements in various employment-related class action categories exceeded $3.19 billion in 2021, compared to $1.58 billion in 2020, $1.34 billion in 2019, and $1.32 billion in 2018. For wage & hour class actions, the monetary value of the top 10 private plaintiff settlements entered into or paid in 2021 reached $641.3 million. This amount represents a monumental increase from the 2020 total of $294.6 million, as well as the 2019 total of $449.05 million. For ERISA class actions, the monetary value of the top 10 private plaintiff settlements entered into or paid in 2021 totaled $411.05 million, more than the 2020 total of $380.10 million and the 2019 total of $376.35 million. The only areas of decline were private-plaintiff employment discrimination and government enforcement action settlements. The top 10 employment discrimination settlements garnered $323.45 million in 2021, as compared to settlement figures of $422.68 in 2020 and $137.35 million in 2019, and the top 10 government enforcement action settlements garnered $146.38 million, a sharp decline from the 2020 total of $241 million, but a significant jump from the 2019 total of $57.52 million.
Deluge Of Wage & Hour Litigation
Second, wage & hour litigation remained a sweet spot for the plaintiffs’ class action bar as it achieved high rates of success at both the certification and decertification stages. Based on sheer volume and statistical numbers, workers certified more class and collective actions in the wage & hour space in 2021 as compared to any other area of workplace law. While evolving case law precedents and new defense approaches resulted in many good outcomes for employers opposing class and collective action certification requests in 2021, the plaintiffs’ bar sustained its high rate of success on first-stage conditional certification motions in 2021 and markedly improved its rate of success on second-stage decertification motions. Perhaps due to the backlog resulting from pandemic-related court closures, the overall number of rulings increased in 2021, and plaintiffs prevailed on those first-stage motions at a rate exceeded only by the rate at which they prevailed in 2020. Of the 298 FLSA wage & hour certification decisions in 2021, plaintiffs won 226 of 279 conditional certification rulings (approximately 81%). As to second-stage decertification motions, plaintiffs prevailed at a similar rate in 2021 than in other years of the past decade. Plaintiffs lost 10 of 19 decertification motions (approximately 53%). By comparison, employers saw 286 wage & hour certification decisions in 2020, and plaintiffs won 231 of 274 conditional certification motions (approximately 84%) and lost six out of 12 decertification rulings (approximately 50%). By further comparison, of the 267 wage & hour certification decisions in 2019, plaintiffs won 198 of 243 conditional certification rulings (approximately 81%), and lost 14 of 24 decertification rulings (approximately 42%). By further comparison, there were 273 wage & hour certification decisions in 2018, where plaintiffs won 196 of 248 conditional certification rulings (approximately 79%) and lost 13 of 25 decertification rulings (approximately 48%). In sum, the plaintiffs’ bar successfully secured certification of wage & hour actions at an astounding rate in 2021, while their odds of clearing the decertification hurdle decreased slightly to 47%. We expect these numbers to rise ever further in 2022 with a more employee-friendly U.S. Department of Labor actively working to eliminate pro-business rules and shifting its regulatory focus toward a plaintiff-friendly agenda.
More Aggressive Government Enforcement Litigation
Third, the change of leadership in the White House translated directly to reversals in administrative agendas, as the Biden Administration’s enforcement authorities took steps to eliminate pro-business rules of the Trump Administration, thereby fueling skepticism regarding the continued weight of agency determinations. Voters elected to turn the White House from red to blue in November 2020 and, as a result, changes in numerous areas rolled out over 2021 that reversed Trump-era pro-business policies and sought to expand worker rights. The Department of Labor (“DOL”), in particular, withdrew or rescinded Trump-era rules, including the tip credit, joint employer, and independent contractor rules promulgated by the DOL during the Trump Administration. For example, after amending the DOL’s Field Operations Handbook in February 2019, the Trump DOL undertook formal rulemaking and, in late 2020, issued a final rule that would have allowed employers to take the tip credit for duties performed “for a reasonable time immediately before or after” a tipped duty. Before that final rule took effect, the Biden Administration delayed its effective date and then rescinded and replaced it with a more complicated, worker-friendly final rule that limited use of the tip credit effective December 28, 2021. Similarly, effective on March 16, 2020, the Trump DOL established a rule that set forth a four-factor balancing test for determining when a business would be considered the “employer” of a worker who simultaneously performs work for another business. The Biden DOL rescinded the Trump DOL rule, effective September 28, 2021, in favor of the more expansive and less predictable “economic reality” test applied by some courts. While the DOL acted swiftly to reverse course on many fronts with the change of administrations, other agencies continue to operate under Trump-appointed majorities and, as a result, have been slower to pivot. Likewise, the chair of the EEOC shifted with President Biden’s inauguration, and major rule shifts came through other avenues. On June 30, 2021, for example, President Biden signed a joint resolution narrowly passed by Congress to repeal a Trump-era rule that would have increased the EEOC’s information-sharing requirements during the statutorily mandated conciliation process. The agency’s filings over the past year reflect this state of affairs. For instance, after more than doubling its inventory of systemic filings between FY 2016 and FY 2018 (with 18 in FY 2016, 30 in FY 2017, and 37 in FY 2018), the EEOC’s systemic filings dropped to 17 in FY 2019, 13 in FY 2020, and 13 in FY 2021. Total filings followed a similar trajectory, with 136 in FY 2016, 202 in FY 2017, 217 in FY 2018, but only 149 in FY 2019, 101 in FY 2020, and 114 in FY in 2021. When the EEOC’s current leadership shifts away from a majority of Trump-appointed Commissioners in mid-2022, employers should anticipate a stark shift in the EEOC’s litigation enforcement program.
Continuing Impact Of COVID-19 On Class Actions
Fourth, COVID-19 class action litigation became more pervasive in reaching across new industries and spawning new challenges on the workplace class action front. The COVID-19 pandemic had a significant, continuing impact on all aspects of life in 2021. Its impact extended to the legal system in general and workplace class actions in particular. As we reported last year, in 2020, 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 companies laid off or furloughed workers, and many businesses shut down or postponed critical operations. In 2021, as vaccines became widely available and state and local governments continued to manage the COVID-19 threat, many employers attempted to move their employees to “return to work” or “hybrid” work arrangements. Such developments prompted federal regulators to enact vaccine-or-test mandates and fueled employers to adopt or expand health screenings, temperature check protocols, and mandatory vaccination policies. These steps, in turn, led to waves of controversy as workplace class actions brought by states, employee advocates, unions, and employer groups erupted over regulatory actions and employer policies. Litigants challenged agency rule-making contending that it exceeded executive authority to regulate conditions of employment. These challenges have met mixed results, as courts have granted approximately 41% of requests for temporary restraining orders or preliminary injunctions to date. Other litigants have challenged employer policies on various grounds, including on the bases that they allegedly discriminated against employees by failing to provide disability or religious accommodations, or retaliated against workers who expressed COVID-related concerns or sought such accommodations. Such challenges have met a lower rate of success, as courts have granted approximately 82% of motions to dismiss such class claims in whole or part. In sum, the pandemic has continued to spike class actions (of all varieties) and litigation over all types of workplace issues. Employers are apt to see these workplace class actions continue to expand and morph in 2022 as the pandemic endures.
Assault On Arbitration Defenses
Fifth, workplace arbitration programs continued to influence the nature of class action litigation and shift the types of claims filed in 2021 as the plaintiffs’ bar continued to find ways to work around such obstacles. As employers clawed for cover from the increasing weight of workplace class action litigation in recent years, workplace arbitration continued to gain steam, aided by the U.S. Supreme Court’s transformative ruling in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018). Epic Systems reaffirmed that the Federal Arbitration Act requires courts to enforce agreements to arbitrate according to their terms, including mandatory agreements that provide for individual proceedings and include class action waivers. Bolstered by such precedents, more than half of non-union, private-sector employers and more than two-thirds of large employers have adopted mandatory arbitration agreements. Such programs have continued to shift class action litigation dynamics in critical ways as they have led to more front-end attacks on proposed class and collective actions and, as the result of such attacks, to the defense bar dismantling more workplace class and collective actions by fracturing those proceedings and diverting them into individual arbitrations. Over the past year, plaintiffs’ class action lawyers continued to attempt to find ways to attempt to end-run such agreements. These efforts took shape on multiple fronts. In 2021, the plaintiffs’ bar continued to shift its efforts toward claims more apt to be immune from such programs or toward populations less likely to have entered into agreements with defendants. This trend is illustrated by the spike in filings based on state laws that are not currently subject to arbitration, like the California Private Attorneys’ General Act (“PAGA”), which filings have quadrupled over the past decade and continued their upward trajectory during 2021. On a different front, advocates for workers and labor redoubled their efforts to shift this landscape by backing new legislation that would amend federal laws to ban mandatory arbitration agreements, depending on the bill, for employment, consumer, antitrust, civil rights, or sexual harassment disputes. In light of current administrative priorities, the future remains anything but clear as to whether arbitration programs will remain viable tools to counter proposed workplace class actions in the face of these continued attacks on Epic Systems.
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. Continuing a trend from 2020, 2021 was a year of great change, inside and outside of the workplace. As these issues play out in 2022, additional chapters in the class action playbook will be written.
The private plaintiffs’ bar are apt to be equally, if not more, aggressive in 2022 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 2022.