By Jennifer Riley, Gerald L. Maatman, Jr., Tyler Zmick, Alex Karasik, Sarah Bauman, and Greg Tsonis

Seyfarth Synopsis:  The Illinois Supreme Court issued its long-awaited decision in McDonald v. Symphony Bronzeville Park, LLC, et al., 2022 IL 126511 (Feb. 3, 2022), holding that claims for statutory damages against an employer under the Illinois Biometric Information Privacy Act (“BIPA”) are not preempted by the exclusivity provisions of the Illinois Workers’ Compensation Act (the “IWCA”).  This ruling is a major development in the BIPA class action landscape, as it resolves a frequently-contested issue and effectively precludes employers from asserting IWCA preemption as a defense to BIPA claims. 

Case Background

The plaintiff in McDonald claimed her former employer, Symphony Bronzeville Park, LLC, violated the BIPA by requiring her and other employees to use a time-clock system that scans their fingerprints without properly providing notice, providing a publicly-available retention policy, or obtaining written consents required by the statute.  Defendant moved to dismiss on the basis that plaintiff’s claims were barred by the exclusivity provisions of the IWCA, under which the sole remedies for employees who have suffered work-related injuries are the remedies set forth in the IWCA.

The trial court denied defendant’s motion to dismiss but certified for appeal the question whether the IWCA’s exclusivity provisions bar a claim for statutory damages under BIPA.  The Illinois Appellate Court affirmed on the grounds that a BIPA claim for statutory damages is not an injury compensable under the IWCA.  See McDonald v. Symphony Bronzeville Park LLC, 2020 IL App (1st) 192398, ¶ 27.

The Illinois Supreme Court’s Decision

On appeal to the Illinois Supreme Court, defendant argued that the IWCA precluded plaintiff’s action because plaintiff’s alleged injury occurred in the course of her employment — meaning her available remedies were limited to those set forth in the IWCA.  In opposition, plaintiff argued that the IWCA’s exclusivity provisions applied only to physical or psychological injuries that are compensable under the IWCA and that a privacy injury under the BIPA constitutes a different type of injury.

The Supreme Court agreed with plaintiff. It held unanimously that her BIPA claims could proceed because her alleged privacy injury “is not categorically within the purview of the [IWCA].”  McDonald v. Symphony Bronzeville Park, LLC, 2022 IL 126511, ¶ 44.

The Supreme Court analyzed the BIPA’s purpose, as articulated in the 2019 decision in Rosenbach v. Six Flags Entertainment Corp., 2019 IL 123186.  The Supreme Court reiterated that through the BIPA, the Illinois General Assembly “codified that individuals possess a right to privacy in and control over their biometric identifiers and biometric information,” and that “when a private entity fails to comply with one of section 15’s requirements, that violation constitutes an invasion, impairment, or denial of the statutory rights of any person or customer whose biometric identifier or biometric information is subject to the breach.”  McDonald, 2022 IL 126511, ¶ 24 (quoting Rosenbach, 2019 IL 123186, ¶ 33).

The Supreme Court explained that the IWCA generally provides the exclusive remedy for work-related injuries, unless a plaintiff can establish one of the four recognized exceptions to the IWCA’s exclusivity provisions, including: (1) if the injury was not accidental; (2) if the injury did not arise from employment; (3) if the injury did not occur during the course of employment; or (4) if the injury is not compensable under the IWCA.  McDonald presented a question regarding the fourth exception, i.e., whether the injury resulting from a BIPA violation is compensable under the IWCA.

In answering in the negative, the Supreme Court relied primarily on its decision in Folta v. Ferro Engineering, where a plaintiff diagnosed with mesothelioma sued his former employer after allegedly being exposed to asbestos on the job.  2015 IL 118070, ¶ 3.  The trial court granted plaintiff’s employer’s motion to dismiss based on the exclusivity provisions of the Workers’ Occupational Diseases Act (the “WODA”), which were interpreted in accordance with the IWCA’s exclusivity provisions.  The plaintiff argued the exclusivity provisions did not apply pursuant to the “compensability” exception because he could not recover under the WODA in that he filed his claim beyond the 25-year repose period.  The Illinois Appellate Court reversed. It opined that the plaintiff’s inability to recover damages under the WODA placed his case within the exception for “non-compensable injuries.”

The Supreme Court reversed the appellate ruling, concluding that the exclusivity provisions barred the plaintiff’s cause of action even though compensation was unavailable due to the statutory time limits.  Folta framed the question of whether an injury is compensable as “not whether an injury was literally compensable, i.e., whether the employee could literally receive compensation for injuries under the acts,” but “whether the type of injury categorically fits within the purview of the” workers’ compensation acts.”  McDonald, 2022 IL 126511, ¶ 24 (quoting Folta, 2015 IL 118070, ¶ 23).  Because the WODA addressed diseases caused by asbestos exposure, Folta held that the plaintiff’s injury was “the type of injury contemplated to be within the scope of” the WODA.  Id. ¶ 39 (quoting Folta, 2015 IL 118070, ¶ 25).

Using Folta’s framework, the Supreme Court in McDonald held that injuries caused by BIPA violations “are different in nature and scope from the physical and psychological work injuries that are compensable under the [IWCA].”  Id. ¶ 43.  The Supreme Court contrasted “injuries that affect an employee’s capacity to perform employment-related duties, which is the type of injury for which the workers’ compensation scheme was created,” with the privacy injuries “caused by violating [BIPA’s] prophylactic requirements.”  Id.

The Supreme Court further noted that the BIPA’s text supported its conclusion because the BIPA “defines the precollection ‘written release’ required by” Section 15(b) of the BIPA “to include ‘a release executed by an employee as a condition of employment.’”  Id. ¶ 45 (quoting 740 ILCS 14/10).  The Supreme Court reasoned that the legislature knew BIPA claims could arise in the employment context, “yet it treated them identically to nonemployee claims except as to permissible methods of obtaining consent.  Therefore, the text of [the BIPA] itself . . . is further evidence that the legislature did not intend for [BIPA] claims to be presented to the Workers’ Compensation Commission.”  Id. ¶ 45.

Implications For Employers

McDonald has major implications for employers facing BIPA claims.  The decision effectively makes the IWCA preemption defense unavailable in BIPA cases.  Moreover, many BIPA cases pending in state and federal courts have been stayed pending the Illinois Supreme Court’s McDonald decision, and those stays may soon be lifted in light of the opinion being released.

Significant questions remain, however, regarding BIPA’s application to companies that collect biometric information.  Some questions will be decided in other appeals pending before the Illinois Supreme Court, which may lead courts to maintain previously-entered stays despite the issuance of McDonald.  For example, the U.S. Court of Appeals for the Seventh Circuit recently issued a decision in Cothron v. White Castle Systems, 20 F.4th 1156 (7th Cir. 2021), certifying to the Illinois Supreme Court the question whether claims asserted under Sections 15(b) and 15(d) of the BIPA accrue only once upon the initial collection or disclosure of biometric information, or each time a private entity collects or discloses biometric information.  (See here).  Similarly, the limitations period applicable to BIPA claims remains unresolved.  As previously noted (here), the Illinois Appellate Court in Tims v. Black Horse Carriers, Inc., 2021 IL App (1st) 200563 (1st Dist. Sept. 17, 2021), held that a one-year limitations period governs actions brought under BIPA Sections 15(c) and (d), while claims under BIPA Sections 15(a), (b), and (e) are subject to the catch-all five-year limitations period.  The Illinois Supreme Court allowed the Tims defendant’s petition for leave to appeal on January 26, 2022 — meaning it is poised to issue two more critical BIPA rulings in the coming months.

Seyfarth Synopsis: Please join us on Tuesday, February 15th for the 18th Annual Workplace Class Action Litigation Report webinar! Register now to secure your spot and review the workplace class action developments of 2021 and what employers should expect for 2022.

About the Program: In our 18th Annual Workplace Class Action Litigation Report Webinar, speakers will provide an in-depth interactive analysis of the class action decisions that shaped labor & employment litigation in 2021 and highlight the key trends emerging for 2022.

As developments in workplace class action litigation continue to evolve under pressure from pro-labor lawmakers and adjust to the modern realities of the American workplace shaped by the ongoing pandemic, corporate counsel and business leaders face unprecedented new challenges and must adapt by recalibrating their compliance strategies to stay ahead of these risks and exposures throughout the year.

Click here to register and attend!

Webinar Date/Time:

Tuesday, February 15, 2022

1:00 p.m. to 2:00 p.m. Eastern
12:00 p.m. to 1:00 p.m. Central
11:00 a.m. to 12:00 p.m. Mountain
10:00 a.m. to 11:00 a.m. Pacific

Speakers:

Gerald L. Maatman, Jr., Partner, Seyfarth Shaw LLP
Kerry M. Friedrichs, Partner, Seyfarth Shaw LLP
Ian H. Morrison, Partner, Seyfarth Shaw LLP
Jennifer A. Riley, Partner, Seyfarth Shaw LLP

 

 

Seyfarth Synopsis: Register today and come join us tomorrow at a Seyfarth Exclusive Event!

You are invited to join Paige Smith of Bloomberg Law and Seyfarth Partner Gerald (“Jerry”) L. Maatman, Jr. for a virtual panel discussion marking the release and book launch of Seyfarth’s 18th Annual Workplace Class Action Litigation Report. Please register here to join this event!

As we move into a shifting landscape of policy and litigation developments in 2022, employers are seeking insights to prepare for the challenges of the future of complex workplace litigation. At this important event, the presenters will provide their analyses of significant trends in workplace class action litigation and government enforcement actions, and a look ahead to likely developments in 2022. Jerry will also discuss the top class action rulings in 2021 and hot topics for 2022, including key trends in class certification, government enforcement litigation, and COVID-19 litigation.

Webinar:

Tuesday, February 1st

Noon – 1 p.m. Eastern
11 a.m. – Noon Central
10 a.m. – 11 a.m. Mountain
9 a.m. – 10 a.m. Pacific

Speakers:

 

 

 

 

 

Paige Smith is a Reporter with Bloomberg Law, covering labor and employment policy on Capitol Hill. She previously covered the Equal Employment Opportunity Commission and the Labor Department’s Office of Federal Contract Compliance Programs, as well as reporting on various employment law-related news.

 

 

 

 

 

 

Gerald L. Maatman, Jr. is one of Seyfarth’s preeminent class action litigators, co-chair of our Class Action Litigation Practice Group, and the Editor of the Workplace Class Action Litigation Report, which is recognized as the nation’s most complete guide to workplace-related complex litigation.

Seyfarth Exclusive! Live Webinar

There is still time to register to attend Seyfarth’s Exclusive Live Webinar Event! You are invited to join Paige Smith of Bloomberg Law and Seyfarth Partner Gerald (“Jerry”) L. Maatman, Jr. for a virtual panel discussion marking the release and book launch of Seyfarth’s 18th Annual Workplace Class Action Litigation Report. Please register here to join now!

As we move into a shifting landscape of policy and litigation developments in 2022, employers are seeking insights to prepare for the challenges of the future of complex workplace litigation. At this important event, the presenters will provide their analyses of significant trends in workplace class action litigation and government enforcement actions, and a look ahead to likely developments in 2022. Jerry will also discuss the top class action rulings in 2021 and hot topics for 2022, including key trends in class certification, government enforcement litigation, and COVID-19 litigation.

Webinar:

Tuesday, February 1st

Noon – 1 p.m. Eastern
11 a.m. – Noon Central
10 a.m. – 11 a.m. Mountain
9 a.m. – 10 a.m. Pacific

Speakers:

 

 

 

 

 

Paige Smith is a Reporter with Bloomberg Law, covering labor and employment policy on Capitol Hill. She previously covered the Equal Employment Opportunity Commission and the Labor Department’s Office of Federal Contract Compliance Programs, as well as reporting on various employment law-related news.

 

 

 

 

 

Gerald L. Maatman, Jr. is one of Seyfarth’s preeminent class action litigators, co-chair of our Class Action Litigation Practice Group, and the Editor of the Workplace Class Action Litigation Report, which is recognized as the nation’s most complete guide to workplace-related complex litigation.

 

 

Seyfarth Synopsis: In yesterday’s blog post, Jerry Maatman outlined the ways in which workplace arbitration programs continued to have a profound impact on workplace class action litigation in 2021. Today, listen to the video blog below to learn how these programs influenced the nature of class action litigation filed and shifted the types of claims and what to expect in 2022.

By Gerald L. Maatman, Jr.

Seyfarth Synopsis: Workplace arbitration programs continued to have a profound impact on workplace class action litigation in 2021. Such programs influenced the nature of class action litigation filed and shifted the types of claims asserted as the plaintiffs’ bar continued to find ways to pivot around such obstacles.

As employers clawed for cover from the increasing weight of workplace class action litigation in recent years, workplace arbitration has continued to gain traction, 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 (FAA) 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.

Workplace arbitration agreements with class action waivers were one of the most potent tools of employers to manage their risk of class action litigation in 2021. In the time period since the Supreme Court decided Epic Systems, businesses facing class action lawsuits have filed more motions to compel arbitration with a higher rate of success than in the years before this landmark decision.

The latest class action litigation statistics show that, over the past five years, motions to compel arbitration have become an increasingly effective defense to class action lawsuits, particularly since Epic Systems.

The following graphic illustrates the number of motions to compel arbitration that were filed from 2016 to 2021:

Over the past year, plaintiffs’ class action lawyers continued to attempt to find ways 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 the defendants. This trend is illustrated by the spike in filings asserting violations of the California Private Attorneys’ General Act (“PAGA”), which claims, according to current California precedent, are not subject to arbitration based on Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014). Such filings have quadrupled over the past decade and, in 2021, continued their upward trajectory. The following graphic illustrates this trend.

In a major turn of events for employers, on December 15, 2021, the U.S. Supreme Court granted a petition for certiorari filed in Viking River Cruises, Inc. v. Moriana, No. 20-1573 (Dec. 15, 2021), to review whether courts can exclude claims brought under the PAGA from federal arbitration requirements, paving the way for a potentially transformative ruling. The Supreme Court’s ruling could dictate the future of the PAGA as a workaround to workplace arbitration, especially as states outside California have considered similar legislation.

On a different front, advocates for workers and labor expanded their efforts to shift this landscape by backing new legislation that would amend federal law to ban mandatory arbitration agreements, depending on the bill, for employment, consumer, antitrust, civil rights, or sexual harassment disputes.

Arbitration agreements have come under increasing scrutiny in recent years, especially with regard to claims for sexual harassment and assault arising during employment. A number of states have attempted to limit employers’ ability to require arbitration of such claims, including states such as California, Maryland, New Jersey, New York, Vermont, and Washington, which have passed statutes in recent years limiting employers’ ability to require arbitration. Most of these efforts, however, have conflicted with the FAA. As a result, worker advocates have targeted their efforts toward amending the FAA or passing laws that limit or prohibit arbitration of workplace disputes.

Multiple proposals have made their way to Congress. In 2021, Senators Kirsten Gillibrand (D-NY) and Lindsey Graham (R-SC) co-sponsored the “Ending Forced Arbitration of Sexual Assault & Sexual Harassment Act of 2021” (S. 2342). The bill has 17 other sponsors, including 10 Democrats and 7 Republicans, and a companion bill introduced in the House (H.R. 4445) has 14 Democratic and 5 Republican sponsors. The Act would amend the FAA to prohibit predispute arbitration agreements, including agreements with class or collective action waivers, for claims involving sexual assault or sexual harassment.

The Resolving Sexual Assault and Harassment Disputes Act of 2021 (S. 3143) was introduced by Senator Joni Ernst (R-IA). The bill would amend the FAA to prohibit arbitration of sexual assault claims and allow for arbitration of sexual harassment claims under limited circumstances. Finally, the Build Back Better Act (H.R. 5376) contains, among many other provisions, language that would overrule the Supreme Court’s decision in Epic Systems by banning collective action waivers in arbitration agreements. This bill passed the House but currently faces unanimous Republican opposition in the Senate. Thus, its prospects are uncertain.

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 continued attacks on Epic Systems. These federal developments suggest that some version of an arbitration bill, particularly if tailored to sexual assault and harassment claims, has a good chance of becoming law.

Seyfarth Synopsis: Yesterday’s blog post analyzed the significant impact of COVID-19 on all aspects of life in 2021, 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 2021, and what lies ahead for 2022.

By Gerald L. Maatman, Jr.

Seyfarth Synopsis: During 2021, 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 impact on all aspects of life in 2021 and a profound impact on the workplace, in particular. 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, or laid off or furloughed workers, and many businesses and courts shut down or postponed critical operations. In 2021, as state and local governments continued to manage the COVID-19 threat, vaccines became widely available, and 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.

Challenges to federal actions, to date, have produced mixed results. On September 9, 2021, President Biden signed Executive Order 14042. Through its terms, the EO required entities that contract with the federal government to agree to require vaccinations for their employees. The EO proclaimed that it “promoted economy and efficiency in Federal procurement by ensuring that the parties that contract with the Federal Government provide adequate COVID-19 safeguards to their workers performing on or in connection with a Federal Government contract or contract-like instrument.“ On November 30, 2021, in State of Louisiana v. Becerra, No. 3:21-CV-03970 (W.D. La. Nov. 30, 2021), however, the district court entered a preliminary injunction enjoining enforcement of the rule.

On a similar front, on November 4, 2021, the U.S. Occupational Safety and Health Administration (OSHA) announced its long-awaited Emergency Temporary Standard (ETS) that required employers with 100 or more employees, among other things, to develop, implement, and enforce policies requiring most employees to get vaccinated or to undergo weekly testing for COVID-19. The ETS became effective upon publication in the Federal Register on November 5, 2021, and set January 4, 2022, as the deadline for employees to receive their final vaccine dose or to begin testing. The ETS covered all employees of covered employers, whether full-time, part-time or temporary, except for employees (a) working alone (in a location where other individuals are not present); (b) working from home; or (c) working exclusively outdoors.

Litigants filed at least 27 lawsuits in 12 different federal circuit courts of appeals challenging such agency rule-making on the grounds that, among other things, it exceeded executive authority to regulate employment conditions. On November 12, 2021, in BST Holdings, LLC v. OSHA, No. 21-60845 (5th Cir. Nov. 12, 2021), the Fifth Circuit stayed the ETS and ordered OSHA to refrain from taking steps to implement or enforce the mandate until further court order, reasoning that the petitioners’ challenges to the mandate were likely to succeed on the merits because, even if the mandate passed constitutional muster, it was the “rare government pronouncement” that was both under-inclusive and over-inclusive. Despite such pronouncement, on December 17, 2021, a Sixth Circuit panel designated to rule on the consolidated challenges lifted the stay, reasoning that the harm caused by keeping the emergency temporary standard frozen outweighed any damage that would stem from letting it go into effect.

The Sixth Circuit’s ruling was quickly appealed on an emergency basis to the U.S. Supreme Court. On December 22, 2021, the U.S. Supreme Court agreed to hear arguments on an expedited basis at a special session on January 7, 2022, and to consider whether it should allow the ETS and another rule, issued by the Centers for Medicare & Medicaid Services requiring vaccinations for employees at facilities that participate in the Medicare and Medicaid healthcare programs, to go into effect. Both cases challenge the authority of administrative agencies and the federal government to issue such sweeping mandates in the context of the pandemic. A ruling is anticipated in the first quarter of 2022.

Challenges to state government actions have proven less successful. For instance, healthcare workers sued to block COVID-19 vaccine mandates in both Maine and New York and sought preliminary injunctions contending that such mandates violated their constitutional rights because they did not include religious exemptions. In both cases, the reviewing courts, respectively, refused to grant injunctive relief, and the U.S. Supreme Court declined requests to intervene in both actions. In total, of the 41 motions for preliminary injunctive relief filed in 2021 to prevent enforcement of vaccination rules, only 15, or 41% were granted.

This trend is illustrated by the following graphic.

Challenges to policies adopted by private employers faced worse odds in 2021. In 2021, litigants challenged employer policies on various grounds, including on the grounds that they supposedly discriminated against employees because they failed to provide disability or religious accommodations or retaliated against workers who expressed COVID-related concerns or sought such accommodations.

In Sambrano v. United Airlines, Inc., No. 21-CV-1074 (N.D. Tex. Nov. 8, 2021), for instance, a group of employees filed a putative class action alleging that United violated Title VII by refusing to engage in an interactive process, by failing to provide reasonable religious accommodations, and by retaliating against them for engaging in protected activity. After granting in part defendant’s motion to dismiss in part on personal jurisdiction grounds, the court denied plaintiffs’ motion for preliminary injunction on the basis that plaintiffs failed to meet their burden to show that, without such an order, they would suffer imminent, irreparable harm.

On December 13, 2021, the Fifth Circuit denied an emergency motion for an injunction pending appeal of the order in Sambrano v. United Airline, Inc., No. 21-11159 (5th Cir. Dec. 13, 2021).

By contrast, in Fraternal Order Of Police Chicago Lodge No. 7 v. City of Chicago, No. 2021 CH 5376 (Ill. Cir. Ct. Nov. 1, 2021), a group of police officers filed an action seeking a temporary restraining order to enjoin the implementation of defendant’s COVID-19 vaccination policy until the parties could arbitrate their grievances pursuant to their collective bargaining agreements. The court granted the motion in part. The court reasoned that, if all employees complied with the vaccine requirements, as of the end of the year, there would be no grievances to adjudicate and no remedy that an arbitrator could award. The court, therefore, ruled that plaintiffs demonstrated irreparable injury, stayed compliance with the vaccination requirement until the parties completed their arbitrations, and granted in part plaintiffs’ motion for a preliminary injunction.

In total, courts have issued 65 opinions on motions to dismiss class action claims related to COVID-19 in 2021, and have granted 82% of those motions in whole or in part. The following graphic shows this trend:

In sum, the pandemic has continued to spike class actions (of all varieties) and litigation over all types of workplace issues. To date, however, defendants have achieved high rates of success in defeating these claims by overcoming motions for preliminary injunction and by prevailing on motions to dismiss in whole or part. Employers are apt to see these workplace class actions continue to expand and morph in 2022 as the pandemic endures.

Seyfarth Synopsis: In our continuing video blog series outlining the findings in our Annual Workplace Class Action Litigation Report, trend #3 detailed how government enforcement litigation shifted in 2021, with changes representing a significant shift in philosophy and practice. Listen below as Jerry Maatman explains what occurred in the government enforcement world last year and what is apt to happen in 2022.

By Gerald L. Maatman, Jr.

Seyfarth Synopsis: With the installation of a new administration in 2021, employers saw almost immediate shifts in administrative priorities. Over the past year, the Biden Administration rolled out changes on several fronts that took shape through executive orders, legislative efforts, and agency actions. Contrary to the pro-business approach of the Trump Administration, the Biden Administration aimed for many of these changes to expand the rights, remedies, and procedural avenues available to workers. As a result, many of these changes are likely to have a cascading impact on the workplace class action landscape in several areas, as they encourage entry into the area and render potential recoveries more lucrative.

The Biden DOL, in particular, withdrew or rescinded multiple Trump-era rules often implicated in workplace class actions, including the tip credit, joint employer, and independent contractor rules promulgated by the Trump DOL. In passing the rules, the Trump DOL sought to clarify and narrow legal standards in these areas and, as a result, to bring predictability to companies struggling to comply with arguably imprecise rules open to inconsistent interpretation and application by courts. In undoing these rules, the Biden Administration has rescinded them and, in some instances, has taken steps to replace them with broader, more demanding standards that are more likely to inspire class-wide challenges.

As to the tip credit, for instance, Section 3(m) of the FLSA permits an employer to take a tip credit toward its minimum wage obligation for tipped employees. The so-called “80/20 Rule,” however, which first appeared in a DOL Field Operations Handbook in 1988, purported to require employers to pay the full minimum wage for any time spent performing non-tip-producing tasks that exceeded 20% of the workweek. Courts applied this guidance, forcing employers to separate tasks into buckets of “tip-producing” duties, “related” duties, and “unrelated” duties, with little direction as which activities fell into which bucket. This uncertainty led to waves of litigation that plagued the restaurant industry, in particular, over the past decade.

In November 2018, the Trump DOL issued an opinion letter wherein it withdrew the 80/20 Rule and, in February 2019, it amended the DOL Field Operations Handbook to replace the 20% limitation with a “reasonable time” standard, noting that “an employer of an employee who has significant non-tip related duties which are inextricably intertwined with their tipped duties should not be forced to account for the time that employee spends doing those intertwined duties.” In December 2020, the Trump DOL issued the Tip Regulations Final Rule.

In early 2021, however, the Biden DOL twice delayed the effective date of the Final Rule. Then, on October 23, 2021, the Biden DOL withdrew the Trump-era rule and introduced its own rule. In addition to resurrecting the 80/20 Rule, the Biden DOL limited the tip credit to non-tip-producing work that directly supports tip-producing work and does not exceed “a continuous period” of 30 minutes. The new DOL tipped-employee rule, which went into effect on December 31, 2021, is apt to refuel workplace litigation in this area, particularly as the hospitality industry struggles with challenges posed by tracking activities and task times.

The Trump-era joint employer and independent contractor rules met a similar fate. Effective March 16, 2020, the Trump DOL issued a new rule for determining when two or more distinct employers could be deemed to jointly employ a worker. The rule set forth a four-factor balancing test that considered whether the business: (1) hires or fires the employee; (2) supervises and controls the employee’s work schedule or conditions of employment to a substantial degree; (3) determines the employee’s rate and method of payment; and (4) maintains the employee’s employment records. 29 C.F.R. § 791.2(a)(1). The rule provided employers more clarity and arguably narrowed the circumstances under which they could be deemed joint employers for wage & hour purposes. Following the effective date, the U.S. District Court for the Southern District of New York, however, opined that portions of the rule violated the Administrative Procedure Act (“APA”). The appeal from that opinion remained pending when, on July 29, 2021, the Biden DOL announced that it would rescind the Trump DOL rule effective September 28, 2021, leaving courts to revert to their pre-Trump-Rule frameworks, which implement a variety of multi-factor tests in interpreting joint employer status.

Effective January 6, 2021, the Trump DOL adopted an Independent Contractor Rule that addressed the circumstances under which a worker qualified as an independent contractor. The Rule consisted of two main factors – the level of control the individual has over his or her own work and the opportunity for profit or loss due to his or her own personal investment – and provided that, if the analysis of the two main factors proved indeterminate regarding independent contractor status, companies should weigh three guiding factors, including the level of skill of the role involved, the permanence of the working relationship, and how the role in question relates to the company’s overall business operation. Overall, the Independent Contractor Rule arguably ran counter to the trend discouraging the use of independent contractors and made it easier for companies, including gig economy businesses, to utilize such arrangements. After staying enforcement of the Rule, on May 5, 2021, the Biden DOL withdrew the Independent Contractor Rule, again leaving courts to revert to their varying pre-Trump-Rule frameworks for deciding independent contractor status.

The changing tide brought by the Biden Administration reached outside the wage & hour space and into other areas likely to impact workplace class action litigation. While the DOL acted swiftly to reverse course on many fronts with the change of administrations, the EEOC continued to operate over parts of the past year with a Trump-appointed majority and, as a result, had limited latitude to pivot. President Biden quickly named two Democrats for the five-member Commission, Charlotte E. Burrows and Jocelyn Samuels, as Chair and Vice Chair, respectively. Although the Chair positions shifted with President Biden’s inauguration, however, the Commission retained a Republican-appointed majority. As a result, the major policy changes that many expected to materialize with the Biden Administration may have to wait through July 1, 2022, when former chair Janel Dhillon’s term expires, opening the door to a Democratic-appointed majority.

Major policy shifts on the employment discrimination front manifested in large part through other avenues. Upon taking office, President Biden issued Executive Order 13988, “Executive Order on Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation,” the fourth Executive Order he signed on January 20, 2021. The order directed all federal agencies to review all policies that implement non-discrimination protections on the basis of sex ordered by Title VII and similar laws and to extend those protections to the categories of sexual orientation and gender identity. President Biden likewise promptly entered Executive Order 13985, “Executive Order on Advancing Racial Equity and Support for Underserved Communities Through the Federal Government” – that revoked President Trump’s Executive Order 13950, “Combating Race and Sex Stereotyping” that directed the head of each agency to ensure that agency employees did not teach, advocate, or promote in training a series of “divisive concepts” such as that one race or sex is inherently superior to another or that the United States is fundamentally racist or sexist – and replaced the directive with one requiring each agency to assess whether, and to what extent, its programs and policies perpetuate systemic barriers to opportunities and benefits for people of color and other underserved groups.

Despite these shifting policy pronouncements from the White House, the EEOC stayed largely on track as compared to the preceding year. During 2020 employers saw significant shifts in the EEOC’s enforcement agenda, including a notable shift away from litigation as a one-size-fits-all tool for combatting workplace discrimination. As the EEOC’s enforcement agenda shifted, employers experienced a marked decrease in federal complaints and a marked increase in settlements as the EEOC sought to wind down its litigation docket.

The EEOC filed a similar number of lawsuits in FY 2021 as compared to FY 2020. The EEOC filed 114 total cases in FY 2021, which included 111 merits lawsuits and 3 subpoena enforcement actions. This total number of filings landed only slightly higher than the FY 2020 total of 101 lawsuits. These totals remain substantially lower than the preceding years, where employers saw 149 filings in FY 2019, 217 filings in FY 2018, 202 filings in FY 2017, and 136 filings in FY 2016. The agency’s systemic filings over the past year followed a similar trajectory. 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.

The following graphic reflects this trend.

In terms of the types of cases filed, when considered on a percentage basis, the types of cases filed in 2021 did not reflect any dramatic shift in strategic priorities. When considered on a percentage basis, the distribution of cases filed by statute remained roughly consistent compared to FY 2020 and FY 2019. Title VII cases once again made up the majority of cases filed, making up 62% of all filings (on par with the 60% in FY 2020 and 60% in FY 2019). ADA cases made up a significant percentage of the EEOC’s filings, totaling 36% in FY 2021, a moderate uptick from 30% in FY 2020. The EEOC filed only one age discrimination case in FY 2021, down seven from FY 2020.

On November 16, 2021, the EEOC released its Agency Financial Report (“AFR”) for Fiscal Year 2021. The AFR is a data compilation regarding the EEOC’s financial health, initiatives, and guiding principles. The FY 2021 edition marked the third version of the publication, following the release of the inaugural AFR in FY 2019. As outlined in the AFR, while lawsuit filings increased slightly in 2021, especially toward the end of the fiscal year in September, the EEOC’s overall monetary recoveries dropped by $51 million, from a record-setting $534.4 million in FY 2020 to approximately $484 million in FY 2021. The FY 2021 number more closely resembled the $486 million recovered in FY 2019, as compared to $505 million in FY 2018 and $484 million in FY 2017.

The amount that the EEOC recovered through mediations, conciliations, and settlements increased from $333.2 million in FY 2020 to approximately $350.7 million in FY 2021, nearly reaching the $354 million recovered in FY 2019. The EEOC announced that it recovered the $350.7 million in FY 2021 on behalf of 11,067 alleged victims of employment discrimination in the private sector and state and local governments. The EEOC also announced that it recovered more than $100 million on behalf of 2,169 federal employees and applicants. On the litigation front, the EEOC reported recovering $34 million for 1,920 individuals as a direct result of litigation resolutions, a sharp decline from the $106 million total in FY 2020 and $39.1 million in FY 2019.

With the pandemic lingering into FY 2021, the EEOC reported a commitment to Alternative Dispute Resolution (“ADR”) programs, including virtual mediation and conciliation proceedings. According to the AFR, in FY 2021, the EEOC successfully resolved 41.1% of its conciliations (51.7% of those included claims that implicated one or more of the EEOC’s Strategic Enforcement Plan priority areas). The EEOC conducted 6,644 private sector mediations, resulting in $176.6 million in benefits to charging parties. This represents a material increase from the $156.6 million recovered in mediations during FY 2020.

Despite the reported commitment to effective conciliation proceedings, and the increase in recoveries from mediations, conciliations, and settlements in FY 2021, on June 30, 2021, President Biden signed a joint resolution narrowly passed by Congress to repeal a Trump-era rule that increased the EEOC’s information sharing during the conciliation process. On October 9, 2020, the Commission published a Notice of Proposed Rulemaking outlining proposed revisions designed to update its conciliation procedures, which it had not changed significantly since 1977. In its announcement, the EEOC acknowledged that, historically, it elected not to adopt detailed regulations relative to its conciliation efforts based on its belief that retaining flexibility over the conciliation process would “more effectively accomplish its goal of preventing and remediating employment discrimination.”6 Although the Commission stressed the importance of maintaining a flexible approach to conciliation, it acknowledged that, over the preceding several years, its conciliation efforts resolved less than half of the charges where it had made a reasonable cause finding. Specifically, between fiscal years 2016 and 2019, only 41.23% of the EEOC’s conciliations with employers were successful.7 (As noted above, in FY 2021, the EEOC successfully resolved 41.1% of its conciliations.)

On January 14, 2021, the EEOC published a final rule that, among other things, would have required the EEOC to provide an employer with a written summary of the known facts that formed the basis of the allegations, to identify known aggrieved individuals or known groups of aggrieved individuals for whom it sought relief unless such individuals requested anonymity, and to supply the calculations underlying any initial conciliation proposal for monetary relief. The White House criticized the procedures as “onerous and rigid,” and, on July 1, 2021, President Biden signed a joint resolution passed by Congress to repeal the EEOC’s final rule that would have overhauled the agency’s prelitigation settlement process.

In sum, whereas employers saw an array of business-friendly rules promulgated by the Trump Administration, the Biden Administration brought changes to these rules that are likely to continue through 2022. Employers can expect continuing shifts and realignments of rulemaking and enforcement priorities that are likely to fuel and shape the contours of workplace class action litigation in the coming year.