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

Seyfarth Synopsis:  On January 7, 2021, the EEOC held a public meeting of its fiscal year to consider three separate agenda items, including a final rule updating the Commission’s conciliation procedures, a formal opinion letter concerning Individual Coverage Health Reimbursement Arrangements under the ADEA, and a final rule amending the Commission’s official time regulation for the federal sector. At the conclusion of the meeting, the EEOC voted in favor of the final rules and issuing the opinion letter. These developments are the latest in a series of high priority press releases issued by EEOC over the past year.

The EEOC held its January 7 meeting remotely and, per the requirements of the Sunshine Act, it was open for the public to call in and listen to the proceedings. EEOC Chair Janet Dhillon, Vice Chair Keith Sonderling, and Commissioners Charlotte Burrows, Jocelyn Samuels, and Andrea Lucas were all present to discuss the content of the final rules and formal opinion letter. In a meeting lasting over four hours, the Commissioners substantively discussed all agenda items.

The first agenda item the Commission considered was the final rule updating the Commission’s conciliation procedures. First announced in August 2020, the EEOC’s rule on updated conciliation procedures changes the information disclosure requirements on the EEOC during the conciliation process in an effort to improve the success of the conciliation program and “to increase the effectiveness of [the Commission’s] efforts to achieve cooperation and voluntary compliance.” The specifics of the Rule’s amendments were discussed more thoroughly by us here. The final rule was approved by a vote of 3-2.

The second agenda item was the issuance of a formal opinion letter regarding whether offering an Individual Coverage Health Reimbursement Arrangement (“ICHRA”) as a defined contribution gives rise to liability under the Age Discrimination in Employment Act of 1967 (“ADEA”).  ICHRAs are a system by which an employer contributes money into an account for an employee, which the employee then uses to purchase health insurance on their own. The opinion letter addresses whether such benefits are unlawful under the ADEA because they could result in older employees shouldering a larger amount and larger proportion of their health insurance premium costs because of age. The Commission’s opinion letter concluded that ICHRAs, if employers deposit the same dollar amount regardless of age, do not violate the ADEA because all employees receive the same amount from the employer and the employer is not involved in the employee’s decision about health insurance coverage.  The vote was 3-2 in favor of the Commission issuing a formal opinion letter.

The third agenda item was a final rule amending the Commission’s official time regulation for the federal sector.  The rule clarifies that its official time provision for federal employees does not apply to representatives who serve in an official capacity for a labor organization. “Official time” is the concept that federal employees who are union representatives represent their coworkers on government time. The Commission sought the amendment because it believes that the relevant labor relations statute articulates the best policy for determining if someone receives official time when they act for a labor organization. The final rule was approved by a vote of 3-2.

During the discussion of these agenda items, Commissioners Samuels and Burrows, the two Democratic commissioners in the EEOC leadership, proposed several amendments that were thoroughly discussed by the leadership. However, the outcome of the proposed amendments highlights the politics that continue to be at play at the EEOC, as their proposed amendments were voted down by the Republican Commissioners. Ultimately, the final votes on all three agenda items also highlight the divide between the Republican and Democrat Commissioners, as all three items were passed three votes to two.

Implications For Employers

The changes to the conciliation procedures will result in substantially more transparency in the conciliation process for employers and will create a more consistent process for employers negotiating conciliation terms with the Commission. Overall, all three agenda items continue to demonstrate a pattern of the EEOC issuing more guidance to employers and attempting to provide more transparency in its practices and procedures.

The ongoing changes at the Commission are a must-watch for employers as the EEOC continues in its 2021 fiscal year, especially as the administration in Washington changes at the end of the month.

Seyfarth Synopsis: In this morning’s blog post, readers were provided with insights into what employers can expect with the White House set to turn “blue” for the next four years, and changes to expect in the workplace class action landscape. In the video below, Jerry Maatman provides his predictions and analysis of the changes employers are apt to see in 2021.

By Gerald L. Maatman, Jr.

Seyfarth Synopsis:  The data and analysis from workplace class action rulings, case filings, and settlements showed that change is the new normal in 2020-2021. 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. Along with changes in 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.

With the final election results in, and the White House set to turn “blue” for the next four years, employers can expect this change to bring shifts to the workplace class action landscape. 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 action and regulation, 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, have the potential to shake up the workplace class action landscape in several areas.

The U.S. Supreme Court issued one of the most transformative decisions on class action issues – Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018) – during the Trump Administration. In Epic Systems, the Supreme Court 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. Epic Systems profoundly impacted the prosecution and defense of workplace class actions in 2020 as it led to more front-end attacks by employers on proposed class and collective actions, and the dismantling of more workplace class and collective actions. Clearly, workplace arbitration agreements with class action waivers are one of the most potent tools of employers to manage their risks of class action litigation.

As the Biden Administration takes office, however, 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.

In the time period since the Supreme Court decided Epic Systems, businesses facing class action lawsuits have filed more motions to compel arbitration and with a higher rate of success than in the years before this landmark decision. While this trend was likely fueled by other factors as well – such as the simplicity and cost-effectiveness of arbitration and the Supreme Court’s other “pro-business” arbitration rulings in recent years – the latest class action litigation statistics show that motions to compel arbitration have become an increasingly effective defense to class action lawsuits since Epic Systems. The following graphic highlights the number of motions to compel arbitration that were filed, granted, and denied from 2016 to 2020:

Along with the arbitration landscape, the shift in administrations is likely to bring efforts to roll back pro-business rules promulgated under the Trump Administration. The U.S. Department of Labor (the “DOL”), in particular, is apt to attempt to shift priorities on multiple fronts under the Biden Administration. As a key element of Biden’s platform, he decried “wage theft” and claimed that employers “steal” billions each year from working people by paying less than the minimum wage. As a candidate, Biden represented that he would build on efforts by the Obama Administration to drive an effort to dramatically reduce worker misclassification. Such statements, among others, signal that the Biden Administration will take efforts to reverse pro-business measures of the DOL under the Trump Administration that arguably narrowed application of minimum wage and overtime requirements.

On January 12, 2020, the DOL announced a final rule to revise and update its regulations interpreting joint employer status under the Fair Labor Standards Act (the “FLSA”). In the joint employer rule, the DOL provided updated guidance for determining joint employer status when an employee performs work for an employer that simultaneously benefits other individuals or entities, including a four-factor balancing test that considers whether the potential joint employer: (i) hires or fires the employee; (ii) supervises and controls the employee’s work schedule or conditions of employment to a substantial degree; (iii) determines the employee’s rate and method of payment; and (iv) maintains the employee’s employment records. Important for employers, the DOL clarified that an employee’s “economic dependence” on a potential joint employer does not dictate whether the entity is a joint employer under the FLSA and that a franchise or similar business model does not make joint employer status under the FLSA more or less likely.

After the joint employer rule became effective on March 16, 2020, 17 states and the District of Columbia filed suit alleging that the regulation violated the Administrative Procedures Act. On June 29, 2020, Judge Gregory Wood of the U.S. District Court for the Southern District of New York, in New York v. Scalia, No. 20-CV-1689 (S.D.N.Y. June 29, 2020), granted a motion to intervene filed by several business groups and, on September 8, 2020, vacated a portion of the rule. On November 6, 2020, the DOL and business groups appealed to the U.S. Court of Appeals for the Second Circuit. After Biden takes office, the DOL almost certainly will drop its participation in the appeal and, if the business groups fail, aim to issue joint employer regulations more consistent with Obama-era guidance.

On September 22, 2020, the DOL also unveiled a proposed regulation regarding classification of workers as independent contractors. In the proposed regulation, the DOL adopted a shorter, simpler test for classifying workers as independent contractors rather than employees covered by federal minimum wage and overtime law. It adopted an “economic reality” test and clarified that the concept of economic dependence turns on whether a worker is in business for himself or herself (i.e., as an independent contractor) or is economically dependent on a potential employer for work (i.e., as an employee). The proposed rule described five factors that should be examined as part of the economic reality test, including two “core” factors – (i) the nature and degree of the worker’s control over the work; and (ii) the worker’s opportunity for profit or loss – that are afforded greater weight in the analysis.

The DOL subsequently fast-tracked the rule-drafting and public-comment process in an effort to solidify the regulation before President Trump left office and thereby provide employers a persuasive tool to fend off class actions accusing them of improperly classifying workers as independent contractors. The DOL under President Biden will have the authority to – and likely will – suspend the rule, along with any other Trump Administration regulation that failed to take effect before the transfer of power on January 20, 2021. Nonetheless, employers can expect business groups to defend the regulation, particularly in light of its favorable impact for the gig economy and other industries.

On November 25, 2020, the DOL also submitted a long-anticipated final rule to the White House Office of Information and Regulatory Affairs that would clarify the tip credit for hospitality industry employers. If adopted as proposed, the rule would allow employers to pay tipped employees a minimum wage of $2.13 per hour regardless of the amount of time they spend on non-tipped duties, such as cleaning their work stations. The new measure would eliminate the so-called 80/20 rule, which first appeared in the DOL’s Field Operations Handbook, and required that, when tipped employees spend more than 20% of their workweek performing general preparation work or maintenance, their employers must pay full minimum wage for the time spent in such duties. Even if the DOL completes the rule before January 20, 2021, however, it will face an uncertain future once President Biden takes office. Similar to the joint employer rule, Democratic state attorneys general are likely to challenge the rule under the Administrative Procedure Act, and the Biden DOL is likely to embrace a return to the less-employer-friendly pre-Trump interpretations of the tip credit rules.

In sum, whereas employers saw an array of business-friendly rules promulgated by the Trump Administration, their futures remain uncertain as the Biden Administration takes charge. Employers can expect multiple shifts and realignments of rulemaking and enforcement priorities that may fuel and shape the contours of workplace class action litigation, particularly on the wage & hour front.

Seyfarth Synopsis: This morning’s blog post analyzed the significant impact of COVID-19 on all aspects of life in 2020, including the legal system in general and workplace class action litigation in particular. Today, the Workplace Class Action Report (WCAR) video series continues with Seyfarth partner Jerry Maatman’s explanation of how COVID-19 changed the class action world in 2020, and what lies ahead for 2021.

Seyfarth Synopsis: 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. 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. Employers are apt to see these workplace class actions expand and morph as businesses restart operations in the wake of COVID-19.

As state and local governments responded to the COVID-19 threat, many employers moved their employees to tele-work or work-from-home arrangements, or laid off or furloughed workers, and many businesses – and courts – shut down or postponed critical operations.

The pace of court filings, however, did not match this trend as the Plaintiffs’ bar retooled their theories to match. During 2020, COVID-19 gave rise to at least 1,005 workplace lawsuits, filed across 47 states and 28 industries. As business operations reopen in 2021, even more coronavirus-related lawsuits are expected in 2021.

As the following graphic demonstrates, the plaintiffs’ bar focused these lawsuits in traditionally employee-friendly jurisdictions, as they filed 181, or 18%, of these suits in California, followed in numbers by New Jersey (150), Florida (95), New York (68), and Ohio (66).

Reflecting the creativity of the plaintiffs’ bar, in the lawsuits filed to date, plaintiffs have asserted 46 different issues or theories of liability, with five primary theories as the key drivers of COVID-19 workplace litigation, including: (1) alleged failure to provide a safe working environment; (2) discrimination claims, particularly relating to disability and age; (3) leave claims under the FMLA and the patchwork of federal, state, and local laws enacted in response to the pandemic; (4) retaliation and whistleblower claims, often attached to either a workplace safety or leave issue; and (5) wage & hour lawsuits arising out of the pandemic.

The following graphic illustrates the breakdown by issue.

Understandably, in-house legal professionals overwhelmingly cite workplace liability as the biggest legal risk they face related to the global health crisis. The lawsuits were spread across a broad array of industries, with highest numbers targeting healthcare and business services, as illustrated by the following chart. Employers of all industries and sizes, however, are continuing to ready themselves for workplace litigation that they anticipate is still in the pipeline, as the new theories developed in response to the pandemic become part of the fabric of workplace litigation for years to come.

We anticipate that the tide of workplace class action litigation will continue to rise in several key areas such as discrimination and workplace bias, wage & hour, as well as on the health & safety front. Employers are apt to see these workplace class actions expand and morph as businesses restart operations in 2021 in the wake of COVID-19, particularly as courts roll out a patchwork quilt of rulings.

These filings reflect the creativity of the plaintiffs’ bar, particularly in the workplace safety arena. The Occupational Safety & Health Act (“OSHA”) requires that employers provide a workplace “free from recognized hazards that are causing or are likely to cause death or serious physical harm.” In the context of COVID-19, the OSHA advised employers to follow guidelines from the CDC, such as sanitizing surfaces and ensuring social distancing. Whereas federal administrative guidance does not generally give rise to a private cause of action, members of the plaintiffs’ bar attempted to shoehorn failures to comply into claims for public nuisance as well as claims for breach of duty to protect the health and safety of employees.

As lawsuits rolled in from employees who alleged that they were “encouraged” to continue attending work, that they were prevented from adequately washing hands or sanitizing workstations, and that their employers’ efforts fell short of providing protection of their workers’ health, courts issued a series of rulings as to whether those alleging “failure to protect” can state a viable claim, particularly if they did not contract the disease. A federal court in Missouri in Rural Community Workers Alliance v. Smithfield Foods, Inc., No. 20-CV-6063 (W.D. Mo. May 5, 2020), for instance, granted a motion to dismiss claims that an employer failed to protect employees at a meat processing plant, and declined to hear the case pursuant to the primary jurisdiction doctrine to allow the OSHA to consider the issues. An Illinois state court, in Massey v. McDonald’s Corp., No. 2020-CH-04247 (Cir. Ct. Cook County June 3, 2020), by contrast, refused to toss accusations by a proposed class of Chicago-based employees that their employer failed to do enough to protect them during the ongoing pandemic. Further, a California state court in United Farm Workers of America, et al. v. Foster Poultry Farms, No. 20-CV-3605 (Cal. Super. Ct. Dec. 23, 2020), entered a tentative ruling approving a temporary restraining order to require an employer to follow CDC guidelines to keep its plant workers safe from COVID-19.

Despite the swell of filings, by the end of 2020, few cases raising COVID-related issues had matured to the class certification stage. As a result, few courts had considered whether the pandemic gave rise to concerns that aided plaintiffs in clearing certification hurdles, and the courts that considered such issues reached different conclusions. On April 10, 2020, for instance, a court in the Northern District of Illinois in Money v. Pritzker, No. 20-CV-02093 (N.D. Ill. April 10, 2020), declined to certify a class of state inmates concerned about their risk of COVID-19 infection because it found that each putative class member came with a unique situation and the imperative of individualized determinations rendered the case inappropriate for class treatment. On June 6, 2020, a court in the Southern District of Florida reached a different result in Gayle v. Meade, No. 20-CV-21553 (S.D. Fla. June 6, 2020). Focusing on the threat of a heightened risk of severe illness, despite the need for individualized assessment of each detainee’s vulnerabilities to COVID-19, the court ruled that plaintiffs satisfied Rule 23’s commonality requirement by pointing to common conduct, including failure to implement adequate precautionary measures and protocols, lack of access to hygiene products, and lack of social distancing. Companies should anticipate that, as employers continue to navigate the pandemic and filings work their way through the court system, 2021 will bring additional lawsuits and additional rulings on myriad issues that shape future litigation.

Seyfarth Synopsis:  As our Annual Workplace Class Action Litigation Report discusses, 2020 was a year unlike any year in history in regards to workplace class action litigation. In this video, Jerry Maatman – partner at Seyfarth, co-chair of the firm’s class action defense group, and author/editor of the Report – discusses the genesis of the Report. Jerry provides insight into developments in 2020, as well as a brief overview of this year’s five top trends. Finally, he provides insights on our what employers may expect to see in 2021.  Check it out below! 

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.

By Karla Grossenbacher and Gerald L. Maatman, Jr.

Seyfarth Synopsis: On December 16, 2020, the U.S. Equal Employment Opportunity Commission issued guidance for employers on the interplay of workplace bias laws and COVID-19 vaccinations. As all employers are facing these issues in the coming weeks with the roll-out of vaccinations, the EEOC’s guidance should be required reading for all businesses.

Introduction

In an effort to be responsive to the need of employers to have clear guidance on the extent to which they can mandate the COVID-19 vaccine under the Americans With Disabilities Act and Title VII in the wake of Emergency Use Authorization for the Pfizer/BioNTech vaccine, the EEOC updated its Technical Assistance guide “What You Should Know About COVID-19 and the ADA, Rehabilitation Act, and Other EEO Laws” on the subject of vaccines. In this respect, the Commission acted quickly in terms of its responsiveness to the employer community that had publicly challenged the EEOC to detail this guidance in the fast-changing COVID-19 world this past month.

Essentially, the EEOC has said all employers can require mandatory vaccines as long the employer: (i) allows employees to receive the vaccine from a third party that does not have a contract with the employer, and (ii) follows accommodation requirements under the ADA and Title VII.

The Revised Guidelines

The main legal restriction on requiring employees to be vaccinated comes from the ADA, which contains strict restrictions on an employer’s ability to require employees to undergo a medical examination and make disability-related inquiries. Today, the EEOC stated in its revised guidance that a vaccine is not a medical examination and that asking employees about whether or not they have been vaccinated is not a disability-related inquiry. (On the latter point, at least one federal court has arguably held to the contrary, holding that inquiring about whether an employee is immune to a disease is a disability-related inquiry.)  However, the EEOC also stated that pre-screening questions asked by the employer, or a contractor administering the vaccine at the employer’s request, “may” implicate the ADA’s provision on disability-related inquiries as they are “likely” to elicit information about a disability. Thus, if an employer administers the vaccine, or a contractor does so on its behalf, the employer must show that such pre-screening questions are job-related and consistent with business necessity. In order to do this, an employer must show that an employee who refuses to answer pre-screening questions, and therefore cannot receive the vaccine, will pose a direct threat to the health or safety of him/herself or others.

Notwithstanding the above, the EEOC identified two scenarios in which an employer can ask such pre-screening questions without making a showing that they are job-related and consistent with business necessity. First, if an employer offers vaccination to employees on a voluntary basis and the decision to answer the pre-screening questions is also voluntary, this will not pose an issue under the ADA. The employee can choose not to answer the questions, and the only consequence will be that the employee will not receive the vaccine. Second, if the employer mandates that employees receive a COVID vaccine and an employee receives the vaccine from a third party with whom the employer does not have a contract, the ADA restrictions on disability-related inquiries are not implicated. Given this last point, it is permissible for all employers under the ADA to mandate the COVID vaccine (subject to accommodation requests as described below) as long as the employees receive the vaccine from a third party pharmacy or other medical provider with which the employer does not have a contract.

Reasonable Accommodation Issues Under The ADA

In terms of exceptions for the need to provide a reasonable accommodation, the EEOC reiterated its prior guidance that disability-related and religious objections must be accommodated to the extent required under applicable law. Regarding disability-related objections, the EEOC opined in its guidance that, if a vaccination requirement screens out or tends to screen out an individual with a disability, the employer must show that an unvaccinated employee would pose a direct threat due to a “significant risk of substantial harm to the health or safety of the individual or others that cannot be reduced by reasonable accommodation.” The EEOC advised that employers should conduct an individualized assessment of four factors in determining whether or not a direct threat exists:

(a) the duration of the risk;

(b) the natured and severity of the potential harm;

(c) the likelihood that the potential harm will occur; and

(d) the imminence of the potential harm.

The EEOC further explained that a determination that an individual presents a direct threat would necessarily “include a determination that an unvaccinated individual will expose others to the virus at the worksite.” Even if such a determination is made, the employee cannot be excluded from the workplace or subject to any other action unless there is “no way” to provide a reasonable accommodation absent undue hardship that would eliminate or reduce the risk posed by the unvaccinated employee.  Exclusion from the workplace is not the same as termination from employment, as employees may be entitled to telework or take leave provided by law or under the employer’s policies.  In addition, employers must still engage in the interactive process regarding disability-related requests for accommodation. In considering whether undue hardship is presented, the EEOC stated that employers should consider the number of employees who have already been vaccinated in its workplace and the amount of contact with unvaccinated individuals in the workplace would occur. Employers may also consider CDC recommendations concerning what might be an effective accommodation and consider OSHA standards and guidance concerning particular job duties and workplaces.

Religious Accommodation Issues

Concerning religious objections, the EEOC opined that, once an employer is on notice that an employee’s sincerely held religious belief, practice or observance prevents the employee from receiving the vaccination, the employer must provide a reasonable accommodation unless it would pose an undue hardship under Title VII, which has been defined by courts as more than a de minimus cost or burden on the employer. The EEOC reiterated its prior guidance that employers should normally assume that an employee’s request for a religious accommodation is based on a sincerely held religious belief. However, if the employer has an objective basis for questioning the religious nature or sincerity of the belief, the employer can request documentation. At least one federal court has held that being an “anti-vaxxer” is not a religious belief. If there is no accommodation possible for an employee with a sincerely held religious objection to receiving the vaccine, the employer may exclude the employee from the workplace if it can establish undue hardship under Title VII standards.

Implications For Employers

Today’s guidance effectively provides employers with the authority they have been seeking on whether they can require employees to receive the COVID vaccine before entering the workplace when it is available; they can. Questions still remain about what circumstances might present an undue hardship on a specific employer with regard to a request for accommodation and what might be a reasonable accommodation for a specific employee. Of course, each employer will have to decide whether or not — legal considerations aside — the employer wants to mandate a COVID vaccine for its employees.

 

Seyfarth Synopsis: Happy Holidays to our loyal readers of the Workplace Class Action Blog! Our elves are busy at work this holiday season in wrapping up our start-of-the-year kick-off publication – Seyfarth Shaw’s Annual Workplace Class Action Litigation Report. We anticipate going to press in early January, and launching the 2021 Report to our readers from our Blog.

This will be our 17th Annual Report, and the biggest yet with analysis of over 1,500 class certification rulings from federal and state courts in 2020. The Report will be available for download as an E-Book too.

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 will analyze 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, and ERISA class actions, as well as settlements of government enforcement actions, both with respect to monetary values and injunctive relief provisions. With 2020 being the year of COVID-19, workplace class action litigation took some interesting and unexpected turns.

Information on downloading your copy of the 2021 Report will be available on our blog in early January. Happy Holidays to everyone!

By Gerald L. Maatman, Jr.

Seyfarth Synopsis: On an annual basis the American Tort Reform Association (“ATRA”) publishes its “Judicial Hellholes Report.” The Report focuses on litigation issues in state court systems and challenges for corporate defendants in the fair and unbiased administration of justice. The ATRA’s 2020-2021 Report was recently published – a copy is here and the executive summary is here.

The Judicial Hellholes Report is an important read for corporate counsel facing class action litigation because it identifies jurisdictions that are generally disadvantageous to defendants. The Report defines a “judicial hellhole” as a jurisdiction where judges in civil cases systematically apply laws and procedures in an unfair and unbalanced manner, generally to the disadvantage of defendants. The Report is a “must read” for anyone litigating class actions and making decisions about venue strategy.

The 2020 Hellholes

In its recently released annual report, the ATRA identified 9 jurisdictions on its 2020 hellholes list – which, in order, include: (1) Philadelphia (especially in the Philadelphia Court of Common Pleas regarding product liability mass tort cases and lawsuits targeting medications and medical devices), (2) New York City (particularly regarding Americans With Disabilities Act accessibility claims and consumer lawsuits against the food and beverage industry), (3) California (with the plaintiffs’ bar taking advantage of unique California laws like the Private Attorney General Act and the California Consumer Protection Act), (4) South Carolina (with regard to asbestos litigation – a new Hellhole for 2020), (5) Louisiana, (6) Georgia, (7) City of St. Louis, Missouri (with typically large punitive damages awards), (8) Illinois (especially Cook, St. Clair, and Madison counties and regarding asbestos litigation and Illinois Biometric Information Privacy Act class actions), and (9) the Twin Cities, Minnesota (particularly the Minnesota Supreme Court with several recent liability-expanding decisions).

According to the ATRA’s analysis, these venues are less than optimal for corporate defendants and often attract plaintiffs’ attorneys, particularly for the filing of class action lawsuits. Therefore, corporate counsel should take particular care if they encounter a class action lawsuit filed in one of these venues.

The 2020 “Watch List”

The ATRA also included 7 jurisdictions on its “watch list,” including Florida (though the ATRA noted that Florida, previously number one on past judicial hellholes lists, has been making strides to improve its liability climate), Oklahoma (a newcomer to the watch list last year, however has been less active in 2020 due to the COVID-19 pandemic), New Jersey, Colorado, Maryland, West Virginia (regarding its Supreme Court of Appeals), and Montana (particularly the Montana Supreme Court).

In addition, the ATRA recognized the all-encompassing impact that the COVID-19 pandemic had on the legal system in 2020. The ATRA cited the pervasiveness of lawsuits regarding executive orders and legislative protections due to the pandemic and noted that thousands of lawsuits have already been filed.

Implications For Employers

The Judicial Hellholes Report dovetails with the experience of employers in high-stakes workplace class actions, as California, Missouri, New York, Pennsylvania, New Jersey, Illinois, Louisiana, and Florida are among the leading states where Plaintiffs’ lawyers file employment discrimination and wage & hour class actions. Many of these jurisdictions are also becoming a hotbed for privacy and accessibility-related lawsuits. These jurisdictions are linked by class certification standards that are more plaintiff-friendly and by generous damages recovery possibilities under state laws.