By Gerald L. Maatman, Jr.

Seyfarth Synopsis: In our continuing coverage of the top trends found in Seyfarth’s 2021 Workplace Class Action Litigation Report, in 2020, 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.

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. These shifts likely resulted from the pro-business stance of the Trump Administration. The EEOC saw considerable leadership turnover at the top as Trump’s nominees for Commissioner slots were finally confirmed on May 3, 2019 (Janet Dhillon, Chair) and September 22, 2020 (Keith Sonderling, Vice Chair, and Andrea Lucas, Commissioner).

Prior to September 2020, the EEOC’s leadership consisted of only three of five Commissioners, including Janet Dhillon, Chair (Republican), Vicki Lipnic (Republican), and Charlotte Burrows (Democrat). Commissioner Lipnic’s term technically expired in July 2020, but she was allowed to stay on through September 2020 so that the Commission would have a quorum and could operate. On September 22, 2020, the Senate confirmed three new Commissioners, two Republicans and one Democrat, for the two vacant seats and the seat formerly held by Lipnic. The Commission must remain bipartisan by law, but these new additions solidified a Republican majority at least until July 2022 when Dhillon’s term expires, despite the result of the 2020 election in flipping the White House from red to blue.

The total number of new lawsuits filed by the EEOC decreased significantly during 2020. The EEOC filed 94 merits lawsuits and seven subpoena enforcement actions, a stark decline compared to the 144 merits lawsuits and eight subpoena enforcement actions filed during 2019. This represented a 35% reduction in total actions commenced by the Commission year over year. Despite the shift in administrations, employers can expect that the EEOC’s majority-Republican leadership will continue to curtail litigation efforts in 2021.

Although the numbers declined, when considered on a percentage basis, the distribution of cases filed in terms of their theories of liability remained largely consistent compared to 2019. Title VII and ADA cases once again comprised the majority of cases filed by the Commission, suggesting that enforcement priorities did not shift dramatically and remained fairly consistent under the Trump Administration. This past year marked the fourth year of the EEOC’s 2017-2021 Strategic Enforcement Plan (“SEP”), which guides enforcement activity. The six enforcement priorities set forth in the SEP include: (1) the elimination of systemic barriers in recruitment and hiring; (2) protection of immigrant, migrant, and other vulnerable workers; (3) addressing emerging and developing issues; (4) enforcing equal pay laws; (5) preserving access to the legal system; and (6) preventing harassment through systemic enforcement and targeted outreach.

The Commission maintains discretion to interpret and pursue these priorities as it deems appropriate. Although the SEP defined priorities, they are broad and apply to an expansive landscape of issues. For example, the EEOC consistently has focused on the protection of lesbian, gay, bisexual, and transgender individuals over the past several years as an emerging and developing issue in the workplace.

The EEOC’s efforts in this area resulted in a body of case law across jurisdictions, culminating in the U.S. Supreme Court’s landmark decision in R.G. & G.R. Funeral Homes, Inc. v. EEOC & Bostock v. Clayton County, Georgia, which held that Title VII prohibits discrimination against gay or transgender employees as a form of sex discrimination. The 6-3 decision authored by Justice Gorsuch represented a significant victory for the EEOC during 2020.

Additionally, during 2020, employers saw a flurry of activity at the EEOC relative to its internal practices and procedures, with the Commission pushing to meet objectives prior to the change in administrations on January 20, 2021. Notably, the EEOC made strides to shift its internal decision-making authority, update its conciliation and mediation procedures, and voluntarily scale back some of its authority.

First, on March 10, 2020, the EEOC released information about a significant internal resolution that reassigned authority for certain high-stakes litigation decisions within the Commission. The resolution reined in many of the powers previously held by the EEOC’s General Counsel and, in turn, the Commission’s various Regional Attorneys, who historically have wielded considerable discretion over the types of lawsuits that they file and the legal positions that they advance. Under the new resolution, the Commissioners – and not the General Counsel (or Regional Attorneys) – will make key litigation decisions concerning systemic litigation and various other matters. According to the resolution, the Commissioners now have exclusive authority over the following:

  • Cases involving an allegation of systemic discrimination or a pattern or practice of discrimination;
  • Cases expected to involve a major expenditure of agency resources, including staffing and staff time, or expenses associated with extensive discovery or expert witnesses;
  • Cases presenting issues on which the Commission has taken a position contrary to precedent in the Circuit in which the case will be filed;
  • Cases presenting issues on which the General Counsel proposes to take a position contrary to precedent in the Circuit in which the case will be filed;
  • Other cases reasonably believed to be appropriate for Commission approval in the judgment of the General Counsel. This category includes, but is not limited to, cases that implicate areas of the law that are not settled and cases that are likely to generate public controversy;
  • All recommendations in favor of Commission participation as amicus curiae; and
  • A minimum of one litigation recommendation from each District Office each fiscal year, including litigation recommendations based on the above criteria.

Even with respect to those cases that do not raise the issues enumerated above, the General Counsel is now obligated to communicate about more garden variety cases with the Chair and, at the Chair’s request, shall consult with the Chair to decide whether those cases should be brought before the Commissioners for a vote. If the Chair does not advise the General Counsel within five business days as to whether a particular case must be submitted to the Commissioners for a vote, the General Counsel retains authority to proceed with a lawsuit on her own initiative.

These changes represent a stunning reduction in the General Counsel’s discretion. For many years, the General Counsel and attorneys in the field appeared to exercise broad control over the types of cases the EEOC would file, the theories of law that it would pursue, and the litigation tactics that it would employ. Because the General Counsel was encouraged to delegate that authority to Regional Attorneys across the country, the result was a sometimes fragmented, district-by-district approach to EEOC enforcement litigation.

Second, on July 7, 2020, the EEOC issued a press release announcing two new six-month pilot programs aimed at increasing voluntary resolutions of discrimination charges via changes to its conciliation and mediation programs. Then, on October 8, 2020, the EEOC released the specifics of a Notice of Proposed Rulemaking (“NPRM”) seeking to make additional changes to the conciliation process. In its NPRM, 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. Although the Commission’s NPRM makes clear that the Commission still believes that it is important to maintain a flexible approach to conciliation, it also acknowledged that, over the last several years, its conciliation efforts resolved less than half of the charges where a reasonable cause finding was made. Specifically, between fiscal years 2016 and 2019, only 41.23% of the EEOC’s conciliations with employers were successful.

Third, on September 3, 2020, the EEOC issued a rare opinion letter regarding the Commission’s interpretation and enforcement of § 707(a) of Title VII, which authorizes the EEOC to sue employers engaged in a “pattern or practice” of discrimination. The opinion letter addressed two seemingly technical questions, including: (1) whether a pattern or practice claim under § 707(a) requires allegations of violations of § 703 or § 704 of Title VII; and (2) whether the EEOC must satisfy pre-suit requirements such as conciliation before it can bring a § 707 case. In a lengthy discussion, the EEOC ultimately concluded that the answer to both questions is “yes.” Notably, the Commission’s letter first acknowledged that “[t]he Commission, like all agencies, is a ‘creature of statute’ that only has the authority that Congress has given it . . . Therefore, in performing its duties, the Commission must follow the statutory language that Congress has provided.” This language signals a new approach from the Commission that voluntarily limits the EEOC’s authority, particularly relative to claims in pattern or practice suits to only concrete allegations of discrimination.

Fourth, on November 2, 2020, the EEOC held its first public meeting of FY 2021 to consider a proposed memorandum of understanding (“MOU”) between the EEOC, the Department of Labor (“DOL”), and the Department of Justice (“DOJ”) aimed at recommitting to collaboration between the agencies and coordinating efforts to protect civil rights in the workplace. Key provisions of the MOU included strengthening procedures for coordination between the three agencies at the field and headquarters levels, including discussions on enforcement priorities and coordinating on issues like religious liberty, conscious protections, and novel or unique issues and bringing greater efficiencies to the investigation process.

Collectively, these changes represent a significant shift in the EEOC’s philosophy and practice toward a curtailment of its own powers and a shift away from using litigation as the blunt-force instrument of choice. These changes are apt to influence the Commission’s approach into 2021 and beyond.

Although the EEOC’s total litigation filings for 2020 reflected a marked decline, the Commission’s “Agency Financial Report” (“AFR”), which was released in November 2020, touted a surge in recoveries on behalf of employees. The AFR provided a snapshot of FY 2020 performance highlights, including the following:

  • During FY 2020, the EEOC recovered a record amount of $535.4 million on behalf of alleged discrimination victims. By comparison, the EEOC recovered approximately $486 million in FY 2019; approximately $505 million in FY 2018; and approximately $484 million in FY 2017.
  • The amount recovered through mediation, conciliation, and settlement dropped from $354 million in FY 2019 to $333.2 million in FY 2020.
  • Conversely, litigation recoveries increased from $39.1 million in FY 2019 to $106 million in FY 2020, the highest in 16 years. The EEOC credits this surge in litigation recovery to its resolution of 165 lawsuits in FY 2020 and stated that it achieved “favorable results” in approximately 96% of its court resolutions.
  • The Commission reported a reduction of the inventory of pending private sector charges by 3.7% – to 41,951 charges – that now represents the lowest inventory of charges in 14 years.

Further, national origin discrimination has continued to become an increasingly large part of the EEOC’s enforcement agenda. The EEOC has expressed in a number of places that it is concerned about the impact that global phenomena can have on worker relations in the United States. Historically, those concerns have been focused on how global terrorism and unrest in the Middle East could lead to discrimination against Muslim or Sikh employees or those of Middle Eastern or South Asian descent, or how illegal immigration issues could give rise to discrimination against Mexican or South and Central American workers. The COVID-19 pandemic could change this focus somewhat moving forward, as the outbreak of a deadly pandemic that had its origin in China has given rise to increased concerns about national origin discrimination against Asian Americans, as cautioned by EEOC Chair Dhillon in a statement issued early during the COVID-19 pandemic.

On the DOL front, like many agencies, its agenda this year was occupied with issues relating to the COVID-19 pandemic. The DOL was busy enforcing and issuing guidance on implementation of the Families First Coronavirus Response Act, with the Wage & Hour Division consistently updating FAQ guidance on the Act. The DOL also issued final “temporary” regulations interpreting the FCRA. Despite the COVID-19 detour, the DOL accomplished many of its other objectives prior to the 2020 election. The agency announced new joint employer and independent contractor rules, discussed above; issued a final rule that allows employers to pay bonuses or other incentive-based pay to salaried, non-exempt employees whose hours vary from week to week; issued joint guidance with the IRS providing that insurers can allow the newly jobless to sign up for a coverage extension known as the COBRA, at any time up to 60 days after the national emergency declaration for COVID-19 is lifted; and announced it would no longer seek “double damages” in FLSA actions where there is no clear evidence of bad faith and willfulness or where the employer has no prior history of violations.

Finally, the National Labor Relations Board (“NLRB”) continued its trend toward more conservative views of labor laws in 2020. It ruled that an employer may discipline workers for making profane, abusive, or offensive statements, so long as the employer’s action is not based on specific anti-union animus, reinstating the previously-reversed Wright Line analysis, and it issued a final rule providing that an entity may be considered a joint employer of a separate employer’s employees only if the two share or co-determine employees’ essential terms and conditions of employment, which are exclusively defined as wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction. Employers can anticipate, however, that 2021 will look markedly different, as the Biden Administration has reiterated that supporting organized labor will sit atop of the agenda. The Board is currently operating with a vacant seat with a term running through August 2023, and the General Counsel’s term expires in one year. Before any significant change can happen at the NLRB, the Biden Administration will need to fill the two open seats, necessitating additional changes in leadership.

By Gerald L. Maatman, Jr., Thomas E. Ahlering, Paul Yovanic, Jr.

Seyfarth Synopsis: The New York state legislature recently introduced a standalone biometric information privacy bill, AB 27, that mirrors Illinois’ Biometric Information Privacy Act (740 ILCS § 14/1 et seq., “BIPA”), which has spawned thousands of class actions in the Land of Lincoln. If enacted, The New York bill would become only the second biometric privacy act in the United States to provide a private right of action and plaintiffs’ attorneys’ fees for successful litigants. This represents a significant development for companies and employers operating in New York in light of the explosion of class action litigation over workplace privacy issues.

Details Of New York’s Proposed Legislation

What can otherwise be characterized as BIPA 2.0, New York proposed and introduced its own “Biometric Privacy Act” on January 6, 2021.  New York’s proposed “Biometric Privacy Act” is a carbon copy of the Illinois BIPA, including identical definitions of both biometric identifiers and biometric information. The proposed law prohibits private entities from capturing, collecting, or storing a person’s biometrics without first implementing a policy and obtaining written consent. Most notably, the proposed bill provides for identical remedies to BIPA, whereas an aggrieved person under the proposed bill will be afforded a private right of action with the ability to recover $1,000 for each negligent violation, $5,000 for each intentional or reckless violation, and reasonable attorneys’ fees and costs.

Implications For Companies

Companies that are already familiar with the Illinois BIPA are undoubtedly aware of the risks that the proposed New York biometric privacy bill poses. While the BIPA was enacted in 2010, Illinois has seen an explosion in class action litigation over the past few years brought by employees and consumers alleging that their biometric data was improperly collected for timekeeping, security, and consumer transactions. In fact, between 2015 and 2020 alone, there were over 1,000 Illinois BIPA class action complaints filed across the United States, with additional new filings continuing to be initiated every day.

It remains to be seen if New York’s biometric privacy bill will pass as drafted. However, if enacted as it is currently drafted, companies in New York can also expect to face an onslaught of biometric privacy litigation. Compliance is key, and there no better time to think about your company’s biometric privacy compliance than right now. Companies with New York operations that are utilizing anything that could be considered biometrics, for any reason, should consider audit their practices, policies, and procedures to avoid potentially costly exposure in the event that the bill ultimately passed. Businesses with compliance questions should contact a member of Seyfarth Shaw’s Biometric Privacy Compliance & Litigation Practice Group.

While this proposed bill is only days old, we will provide immediate updates on its progress when available.

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

Seyfarth Synopsis:  On January 8, 2021, the EEOC unveiled a new webpage explaining the administrative and litigation tools used by the Commission to identify and pursue systemic discriminatory practices. This new guidance is the latest in a number of high priority developments at the EEOC this year and is an absolute must-read for employers.

As part of its recent shift to make its processes more transparent to employers and the public, the EEOC’s new webpage provides insights about how the Commission approaches systemic discrimination enforcement efforts. Historically, the EEOC described systemic cases as pattern or practice cases – also often called systemic cases (but not to be confused with Rule 23 class actions, since Rule 23 does not apply to lawsuits brought by the EEOC) – where the discrimination has a significant impact on an industry, profession, company, or geographic location. Over the past several years, the EEOC has taken steps to improve its nationwide approach to addressing systemic issues.

Now, for the first time in several years, this new webpage provides a specific statement about how the Commission defines “systemic” and its approach to addressing such issues. Specifically, the webpage provides background on how the Commission determines that systemic enforcement is effective, explains how the EEOC decides what qualifies as systemic discrimination, and outlines the Commission’s process for initiating and conducting a systemic case.

In the press release announcing the webpage, EEOC Chair Janet Dhillon stated that “[t]he EEOC is strongly committed to making our processes fully transparent and useful to the public,” and that “[s]ystemic enforcement is an important mechanism the Commission uses to remedy discrimination that has broad impacts on industries, professions, or geographic areas.  It is vital that the public knows how we use this tool.”

Implications For Employers

The EEOC’s new webpage is not only helpful to employers, but also is likely a way for the Commission to instruct its field staff now and in the future as to how to identify and address systemic discrimination. The EEOC’s latest shift toward transparency will likely improve consistency among the EEOC’s field offices and provides guidance for employers who are dealing with the Commission on these issues.

The ongoing changes at the Commission are a must-watch for employers as the EEOC continues in its 2021 fiscal year, and we will be tracking the latest developments here.

Seyfarth Synopsis: In our continuing video blog series on the finding of our 2021 Workplace Class Action Litigation Report, somewhat unexpectedly, the aggregate monetary value of workplace class action settlements increased in 2020, despite the global pandemic and its impacts on the economy and business operations. In the video below, Jerry Maatman shares his observations on the settlements across all areas of workplace class actions in 2020, and what employers should expect as we move into 2021.

By Gerald L. Maatman, Jr.

Seyfarth Synopsis: In our continuing series of discussion points from the 2021 Workplace Class Action Litigation Report, somewhat counter-intuitively, 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.

As measured by the top ten largest case resolutions in various workplace class action categories, overall settlement numbers increased in 2020, as compared to the prior two years. After settlement numbers reached an all-time high in 2017, those numbers fell dramatically in 2018, and then leveled off in 2019.

Although many employers and commentators alike expected the pandemic to depress the size and pace of settlements even further as businesses sought to conserve cash in the wake of the COVID-19 pandemic, workplace class action settlements defied expectations.

The numbers show that, in 2020, the plaintiffs’ bar was successful in monetizing their class action filings at a higher level than the past two years, perhaps signaling the beginning of an upward climb toward the numbers we saw in 2016 and 2017.

These trends harken back to the U.S. Supreme Court’s 2011 decision in Wal-Mart, Inc. v. Dukes, 564 U.S. 338 (2011). By tightening Rule 23 standards and raising the bar for class certification, Wal-Mart made it more difficult for plaintiffs to certify class actions and, as a result, more difficult to convert their class action filings into substantial settlements. These barriers became more formidable in 2018 with the Supreme Court’s ruling in Epic Systems v. Lewis, which upheld the validity of class action waivers in mandatory workplace arbitration agreements.

The “Wal-Mart/Epic Systems” phenomenon provided employers a “one-two punch” relative to their defense strategies that continues to impact the contours of class action litigation in 2020. To that end, federal and state courts cited Wal-Mart in 673 rulings in 2020, and they cited Epic Systems in 189 decisions by year’s end.

This past year, the plaintiffs’ bar continued to identify and develop work-arounds that helped to force the settlement of high-value class actions in multiple areas. Considering all types of workplace class actions, settlement numbers in 2020 totaled $1.58 billion, an increase compared to settlements in 2019, which totaled $1.34 billion, and from 2018, when they totaled $1.32 billion. These totals, however, remain significantly lower than their high-water mark in 2017, when such settlements topped $2.72 billion, and slightly lower than 2016, when such settlements totaled $1.75 billion. The following graphic shows this trend:

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

In 2020, we saw a significant upward trend regarding the settlement values of employment discrimination claims, government enforcement litigation, and a slight upward trend regarding ERISA class actions. In contrast, we saw significant decreases across-the-board for resolutions of class actions involving wage & hour claims and private statutory claims.

The results in these categories are illustrated by the following chart for 2020 settlement numbers:

By type of case, settlement values in employment discrimination class actions and government enforcement cases experienced the most significant increases.

Employment discrimination class action settlements showed a significant increase in 2020. The top ten settlements totaled $422.68 million, as compared to $139.2 million in 2019, $216.09 million in 2018, and $293.5 million in 2017. The comparison of the settlement figures with previous settlement activity over the last decade is illustrated in the following chart:

In 2020, the value of the top ten largest employment discrimination class action settlements of $422.68 million was the highest figure reached since we began tracking numbers, and $76.28 million higher than the next highest year recorded (2010).

As such, 2020 represents the reversal of a trend that started in 2011 (after Wal-Mart was decided) that kept the value of the top ten settlements under $300 million in each of the subsequent nine years.

Relatedly, the top ten settlements in government enforcement litigation experienced a sharp upward turn in 2020, as it increased to $241.0 million, a significant jump from the $57.52 million we saw in 2019 and from the $126.7 million recorded in 2018. Although the numbers did not approach the 2017 high-water mark of $485.25 million, they outpaced the numbers lodged in every other year since 2012.

This trend is illustrated by the following chart of settlements from 2012 to 2020:

ERISA class action settlements rose slightly in 2020. The top ten settlements totaled $380.10 million, which topped the 2019 total of $376.35 million, as well as the 2018 total of $313.4 million. ERISA settlements in 2020, however, remained well below prior years, including the $1.31 billion we saw in 2014, the $926.5 million we recorded in 2015, the $807 million we saw in 2016, and the $927.8 million we logged in 2017. Given that ERISA class action settlements over the four-year period from 2014 through 2017 averaged $992.93 million, 2020 continues a trend toward a lower conversion rate for the plaintiffs’ bar.

This trend is illustrated by the following chart of settlements from 2012 to 2020:

The upward year-over-year trend did not hold for wage & hour class action settlements. The value of those settlements in 2020 fell off significantly from the previous year. In 2020, the value of the top ten wage & hour settlements was $294.60 million, compared with $449.05 million in 2019.

Although a significant decrease from 2019, the value held slightly above the lowest levels of the past decade, including above four of the past eight years with values of $292 million (2012), $248.45 million (2013), $215.3 million (2014), and $253.5 million (2018).

On a comparative basis, the top 10 settlements in 2020 likewise fell well short of the spikes we saw in the other four of the previous eight years, with values of $463.6 million (2015), $695.5 million (2016), $525 million (2017), and $449.05 million (2019).

When combined, however, the top 10 wage & hour settlements for the three-year period of 2015, 2016, and 2017 totaled over $1.68 billion. Adding 2018 and 2019 settlements, corporate America saw over $2.386 billion devoted to settling the top 10 wage & hour settlements over that five-year period.

As the impact of the 2018 ruling in Epic Systems continues to provide defenses for businesses inclined to adopt mandatory workplace arbitration programs with class action waivers, and cases filed prior to such adoption continue to work their way out of the pipeline, we could see settlement numbers continue to follow a downward trajectory in 2021.

The top ten settlements in the private plaintiff statutory class action category (e.g., cases brought for breach of contract for employee benefits, workplace antitrust laws, or statutes such as the Fair Credit Reporting Act or the Worker Adjustment and Retraining Notification Act) likewise fell off in 2020. The settlements totaled $244.55 million, which represented a significant decrease from 2019 and the continuation of a downward year-over-year trend that began in 2018. In 2017, such settlements totaled $487.28 million; in 2018, they totaled $411.15 million; and in 2019, they totaled $319.65 million.

The following chart tracks these figures:

Settlement trends in workplace class action litigation are impacted by many factors. In the coming year, settlement activity is apt to be influenced by developing case law interpreting U.S. Supreme Court rulings such as Epic Systems, the Biden Administration’s labor and employment enforcement policies, case filing trends of the plaintiffs’ class action bar, and class certification rulings.

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.