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The Biden DOL, in particular, withdrew or rescinded multiple Trump-era rules often implicated in workplace class actions, including the tip credit, joint employer, and independent contractor rules promulgated by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 In undoing these rules, the Biden Administration has rescinded them and, in some instances, has taken steps to replace them with broader, more demanding standards that are more likely to inspire class-wide challenges.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.

In our continuing video blog series analyzing the findings in our Workplace Class Action Report, trend #2 focuses on the success factor of the plaintiffs’ bar for class certification rulings in 2021. In the video, Jerry Maatman discusses how wage & hour litigation remained the sweet spot for the plaintiffs’ class action bar in 2021 and what this means for employers in 2022. Watch below!

Seyfarth Synopsis: In our continuing coverage of the top trends found in Seyfarth’s 2022 Workplace Class Action Litigation Report, wage & hour litigation remained the sweet spot for the plaintiffs’ class action bar over the past year. Based on sheer volume and statistical numbers, workers certified more class and collective actions in the wage & hour space in 2021 as compared to any other area of workplace. Complex workplace litigation remains one of the chief exposures driving corporate legal budgetary expenditures. Class actions and multi-plaintiff lawsuits, in particular, continue to provide a source of concern for companies. A prime component in that array of risks indisputably continues to include complex wage & hour litigation.

The following map sets forth a circuit-by-circuit analysis of this year’s 332 class certification decisions in all varieties of workplace class action litigation, including wage & hour, employment discrimination, and ERISA.

As the map reflects, in 2021, complex wage & hour litigation under the FLSA drove more certification briefings and a greater number of certification decisions than other areas combined.

Wage & Hour Certification Trends

The ease with which plaintiffs have achieved first-stage certification in the FLSA wage & hour context surely has contributed to the number of filings in that area, and plaintiffs achieved a higher rate of success on initial certification motions in 2021 than in any other year of the past decade, indicating that wage & hour remains a sweet spot for the plaintiffs’ bar.

In 2021, wage & hour lawsuit filings in federal courts decreased for the sixth year in a row. That said, more FLSA lawsuits were filed during each of the preceding nine years – during 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, and 2020 – than were filed in any year of the preceding several decades. Many of these cases remain in the pipeline within federal courts, and the result is a burgeoning case load of wage & hour issues.

To be sure, the significant volume of FLSA filings over the past several years has caused the issuance of more certification rulings in the FLSA area than in any other substantive area of complex employment litigation. Despite the pandemic’s continued impact on court operations and personnel, courts issued more rulings on wage & hour certification issues in 2021 than they issued in each of the past five years. In particular, federal courts issued 298 decisions on FLSA certification and decertification issues in 2021, an increase from the 286 certification rulings issued in 2020, the 267 certification rulings issued in 2019, the 273 certification rulings in 2018, and the 257 certification rulings in 2017.

Of these rulings, 279 addressed first-stage motions for conditional certification of wage & hour collective actions under 29 U.S.C. § 216(b), whereas 19 addressed second-stage motions for decertification. Plaintiffs historically have secured a higher rate of success on the former, while employers have secured a higher rate of success on the latter. In 2021, as noted above, plaintiffs achieved an exceptionally high rate of success on first stage conditional certification motions, equal to or higher than the rate they achieved in any year of the past decade aside from 2020. In 2021, Plaintiffs saw their rate of success at 81%, down slightly from their 2020 success rate of 84%, and the same as their 2019 success rate of 81%. Employers, on the other hand, saw their rate of success on decertification motions rise to 53% in 2021, up from 50% in 2020 and 58% in 2019.

The analysis of these rulings – discussed in Chapter V of this Report – shows that plaintiffs filed a high predominance of cases against employers in “plaintiff-friendly” jurisdictions such as the judicial districts within the Second and Ninth Circuits. For the second time in a decade, however, rulings were equally or more voluminous out of the Sixth Circuit, which also tended to favor workers over employers in conditional certification rulings.

The following map illustrates this trend:

The statistical underpinnings of this circuit-by-circuit analysis of FLSA certification rulings is telling in several respects.

First, it substantiates that the district courts within the Second, Sixth, and Ninth Circuits are the epi-centers of wage & hour class actions and collective actions. More cases were prosecuted and conditionally certified – 47 certification orders in the Second Circuit, 31 certification orders in the Ninth Circuit, and 50 certification orders in the Sixth Circuit – in the district courts in those circuits than in any other areas of the country. For the second time in two years, the Sixth Circuit – which encompass the states of Michigan, Ohio, Kentucky, and Tennessee – had more rulings and certifications than either the Second or Ninth Circuits.

Second, as the burdens of proof under 29 U.S.C. § 216(b) suggest, plaintiffs won the overwhelming majority of “first stage” conditional certification motions (226 of 279 rulings or approximately 81%) in 2021, which was similar to the 2020 numbers (231 of 274 rulings or approximately 84%), the 2019 numbers (198 of 243 or approximately 81%), and the 2018 numbers (196 of 248 rulings or approximately 79%), which were themselves the highest percentages of plaintiff-side wins recorded in the last decade. Further, in terms of “second stage” decertification motions, employers won 53% (10 of 19 rulings) in 2021, which represented a slight rise from the 2020 numbers (6 of 12 rulings or approximately 50%) and the 2019 numbers (14 of 24 rulings or approximately 58%).

Overall, these statistics show robust numbers for the plaintiffs’ bar, as plaintiffs prevailed on “first stage” conditional certification motions at a high rate in 2021 and lost “second stage” decertification motions at a lower rate. The “first stage” conditional certification statistics for plaintiffs at 81% were nearly as favorable as the rate of success that workers obtained in 2020 (84%), as favorable as the rate of success that workers obtained in 2019, when plaintiffs won 81% of “first stage” conditional certification motions, and more favorable as the rate of success that workers obtained in 2018, when plaintiffs won 79% of “first stage” conditional certification motions.

The “second stage” decertification statistics for employers at 53% in 2021 was more favorable to employers than the decertification statistics in 2020, when employers prevailed on 50% of such motions, in 2019, when employers prevailed on 58% of “second stage” decertification motions, in 2018, when employers won 52% of decertification rulings, and in 2017, when employers won 63% of decertification rulings.

The following chart illustrates this trend for 2021:

Third, these numbers reflect the ongoing migration of skilled plaintiffs’ class action lawyers into the wage & hour litigation space. Experienced and able plaintiffs’ class action counsel are apt to secure better results, and the case law that has developed under 29 U.S.C. § 216(b) serves to attract such individuals. In light of the “lenient” standard that many courts apply at the initial conditional certification phase of a case, plaintiffs often can secure “first stage” conditional certification – and foist settlement pressure on an employer – fairly quickly (shortly after filing a case), with minimal monetary investment (e.g., without support from an expert), as compared to class certification in an employment discrimination class action or an ERISA class action, for instance, which typically requires additional discovery, evidentiary submissions, and expert testimony.

As a result, to the extent that litigation of collective actions and class actions by plaintiffs’ lawyers is viewed as an investment of time and money, prosecution of wage & hour lawsuits is a relatively low cost investment, without significant barriers to entry, and with the prospect of immediate returns as compared to other types of workplace class action litigation. Hence, as compared to employment discrimination and ERISA class actions, FLSA litigation is less difficult or protracted for the plaintiffs’ bar, and more cost-effective and predictable. In terms of their “rate of return,” the plaintiffs’ bar can convert their case filings more readily into certification orders and create the conditions for opportunistic settlements over the short term.

The certification statistics for 2021 confirm these factors. Despite the continued impact of the COVID-19 pandemic and the lower rate of case filings, courts issued more certification rulings in 2021 and the plaintiffs’ bar secured more certification victories in 2021 than in any other year of the past decade.

The extent to which Epic Systems will continue to impact wage & hour certification trends remains uncertain. As 2021 reflected, the number of FLSA lawsuits filed in 2021 continued to fall as compared to prior years. Coupled with the settlements and the number of rulings discussed above, these statistics suggest that the plaintiffs’ class action bar is not losing interest in these suits. To the contrary, the number of rulings issued by federal courts, despite the COVID-19 pandemic, suggests that plaintiffs’ counsel are succeeding in obtaining rulings on motions for conditional certification at a higher rate than ever. These factors also indicate that arbitration agreements are not getting in the way of these motions and that, instead, plaintiffs are being more selective in filing their cases or in narrowing the groups of employees that they seek to represent.

As discussed below, given the pro-worker policies of the Biden Administration, employers are seeing legislative efforts to overturn Epic Systems gain traction. Particularly if Democrats are able to retain control of the House and Senate during the remainder of President Biden’s term, employers may see these legislative efforts to overturn Epic Systems succeed. As a result, employers could see substantial expansion of case filing numbers in the next few years.

Employment Discrimination & ERISA Certification Trends

Against the backdrop of wage & hour litigation, the rulings in Wal-Mart and Epic Systems continued to fuel more critical thinking and crafting of case theories in employment discrimination and ERISA class action filings in 2021. The Supreme Court’s Rule 23 decisions forced the plaintiffs’ bar to “re-boot” the architecture of their class action theories.[1] Hence, the playbook on Rule 23 strategies is undergoing a continuous process of evolution, and the plaintiffs’ class action bar is continually testing ways to navigate around and to wear away the force of these precedents.

As to Wal-Mart, one work-around has been the filing of “smaller” employment discrimination class actions. In the past 10 years, employers have seen more statewide or regional-type classes asserted than the type of nationwide mega-case that Wal-Mart discouraged. Plaintiffs’ counsel have been more selective, strategic, and savvy relative to calibrating the focus of their cases and aligning the size of their proposed classes to the limits of Rule 23 certification theories.

As to Epic Systems, at least in the employment discrimination area, Plaintiffs have seemed apt to file scaled-down class actions to test the prevalence of arbitration agreements among putative class members and, depending on the result, to move forward with one or more limited classes of non-signers or to use the threat of undermining the enforceability of the arbitration program to attempt to leverage a settlement prior to obtaining a ruling on the propriety or scope of certification.

In 2021, the number of rulings on motions for class certification expanded as compared to 2020. In 2021, courts issued 18 rulings on motions for class certification in employment discrimination actions, compared with 12 rulings in 2020 and 15 rulings in 2019. Plaintiffs, however, prevailed on these motions at a higher rate. Plaintiffs prevailed in 13 of the 18 rulings, or 72%, in 2021, with four of those rulings emanating from the Ninth Circuit, compared to 5 of the 12 rulings, or 42%, in 2020, again with four of those rulings emanating from the Ninth Circuit.

The rate of success of the plaintiffs’ bar in 2021 on such motions was materially higher than its rate of success in recent years. In 2019, plaintiffs won 7 of the 11 rulings, or 63%, on motions for initial certification of class actions in employment discrimination cases, but plaintiffs lost 4 of 4 motions for decertification, for an overall success rate of 46.7%. By comparison, in 2018, plaintiffs won 3 of the 11 rulings on motions for class certification, or 27%, and, in 2017, plaintiffs won 7 of 11 rulings on such motions, or 64%.

The following map demonstrates the array of certification rulings in Title VII and ADEA discrimination cases:

In terms of the ERISA class action litigation in 2021, the decisions show that employers had the best chance of defeating class certification in the context of ERISA class actions. Courts issued 16 rulings on class certification in 2021, with plaintiffs prevailing in 8 of 14 decisions, or 57%. As a result, 2021 marks plaintiffs’ lowest rate of success in terms on certifying ERISA class action in recent years by a fair margin. In 2020, plaintiffs won 11 of 16 certification rulings, a success rate of 69%. In 2019, plaintiffs won 11 of 17 certification rulings, a success rate of 65%. By comparison, in 2018 plaintiffs won 11 of 17 certification rulings for a similar success rate of 65%, and, in 2017, plaintiffs prevailed in 17 of 22 certification rulings, for a success rate of 77%.

A map illustrating these trends is shown below:

Overall Trends

So what conclusions overall can be drawn on class certification trends in 2021?

In the areas of wage & hour and employment discrimination claims, in particular, the plaintiffs’ bar is converting their case filings into certification of classes at a high rate. To the extent class certification aids the plaintiffs’ bar in monetizing their lawsuit filings and converting them into class action settlements, the conversion rate is robust.

While class certification rates in ERISA class actions took a nose dive in 2021 compared to prior years (8 motions granted and 6 motions denied in 2021, for a success rate of 57%), class certification for employment discrimination cases (13 motions granted and 5 motions denied in 2021) and conditional certification in wage & hour cases (226 motions granted and 53 motions denied in 2021) remained pronounced, with a success rate ranging from 71% to 81%.

The following bar graph details the win/loss percentages in each of these substantive areas:

–          a success rate of 57% for certification of ERISA class actions;

–          a success rate of 72% for certification of employment discrimination class actions (both Title VII and age discrimination cases); and

–          a success rate of 81% for conditional certification of wage & hour collective and class actions.

The most certification activity in workplace class action litigation took place in the wage & hour space. The trend over the past five years in the wage & hour space reflects a steady success rate that ranged from a low of 73% to a high of 84% for the plaintiffs’ bar. The positive results are more concentrated in plaintiff-friendly “magnet” jurisdictions where the case law favors workers and presents challenges to employers seeking to block certification.

The trend over the past five years for certification orders is illustrated in the following chart:

While each case is different, and no two class actions or collective actions are identical, these statistics paint the all-too familiar picture that employers have experienced over the past several years. Although case law precedents and defense approaches continue to evolve and generate many good outcomes for employers, courts continue to grant conditional certification motions at high rates.

Whereas overall case filing numbers were down, the numbers of rulings issued in 2021 and the rate of success of the plaintiffs’ bar in gaining conditional certification suggest that the plaintiffs’ bar is exercising more selectivity and restraint when it comes to filing and seeking certification of narrower or more defined groups, thereby contributing to a higher success rate.

The key bright spots in 2021 for employers were an increase in the odds of defeating certification in ERISA class actions, where employers succeeded in defeating class certification in nearly 43% of the rulings issued during 2021, and in the odds of prevailing on decertification of FLSA collective actions, where employers succeeded in obtaining decertification in 53% of the rulings issued during 2021.

By Gerald L. Maatman, Jr., Christopher DeGroff, Matthew J. Gagnon, and Sarah K. Bauman

Seyfarth Synopsis: As 2022 begins, we are pleased to present our annual selections for the five most intriguing developments in EEOC litigation during 2021, as well as our annual report on developments and trends in EEOC-initiated litigation. This year’s book, entitled EEOC-Initiated Litigation: 2022 Edition, examines the EEOC’s filings in 2021, and analyzes the significant legal decisions and trends impacting EEOC litigation in 2022. We hope that employers will benefit from this deep dive into how the EEOC’s priorities reveal themselves through litigation.

The EEOC pursues dozens of cases across the country annually, guided by its strategic enforcement priorities and objectives. Each year, we analyze those new case filings, and legal decisions handed down by courts across the country, and we publish that analysis in a comprehensive yearly report entitled EEOC-Initiated Litigation: 2022 Edition. In the report, we outline noteworthy trends and try to identify how the Commission intends to pursue its objectives in the year to come.

Our goal is to assist clients to comply with existing laws, and to protect themselves against becoming future targets of enforcement. Our annual report is designed for business leaders, human resources professionals, corporate counsel, and other corporate decision-makers. We hope that it continues to provide them with useful commentary and analysis as they navigate EEOC-initiated litigation in 2022. This year’s book is available here.

In terms of the most interesting decisions and developments of the year, here is our list of the “top five” most intriguing developments of 2021:

Development #1: The Beginning Of A Post-Bostock Battle Between LGBTQ Rights And Religious Freedom

In recent years, the EEOC has aggressively campaigned to have LGBTQ discrimination recognized as a prohibited form of discrimination under Title VII. That issue was finally settled in the landmark decision of Bostock v. Clayton County, 140 S. Ct. 1731 (2020). On June 15, 2020, the U.S. Supreme Court held that Title VII prohibits discrimination against gay or transgender employees because it is tantamount to a form of sex discrimination. At the same time, the EEOC has also continued to direct its attention to religious discrimination and accommodation issues under Title VII. Many commentators see a potential conflict brewing between the religious liberty rights protected by the federal Religious Freedom Restoration Act (“RFRA”) and the Court’s Bostock decision.

The potential conflict between Bostock and the RFRA came to a dramatic head in at least one case this year, Bear Creek Bible Church v. EEOC, 2021 WL 5449038 (N.D. Tex. Nov. 22, 2021), a suit involving a non-denominational Christian Church and for-profit Christian institution that sought to avoid Title VII’s protections of LGBTQ employees under Botstock. In its opinion on November 22, 2021, the District Court held that the Christian Church was exempt from Title VII under the Act’s statutory exemption, and, although the for-profit Christian institution did not qualify for this exemption, it was not required to comply with Title VII since such compliance would substantially interfere with its free exercise of religion. The District Court observed that Bostock “expressly left open the implications for religious liberties and other matters arising from its decision,” and reasoned that “[f]orcing a religious employer to hire, retain, and accommodate employees who conduct themselves contrary to the employer’s views regarding homosexuality and gender identity” was not the least restrictive means of promoting that interest.

This is just one early decision exploring the potential conflict between LGBTQ and religious rights under Title VII. The full implications of Bostock’s impact on the American workforce will have to wait for future developments as it continues to be applied in courts across the county.

Development #2: A Focus On Pregnancy Discrimination

Pregnancy discrimination has been highlighted by the EEOC as an emerging and developing issue of concern for almost a decade. Yet cases alleging such discrimination and case law interpreting this area of the law have been few and far between. This year was a notable exception. In EEOC v. Wal-Mart Stores East, LP,  2021 U.S. Dist. LEXIS 214357 (S.D. Tex. Nov. 5, 2021), the EEOC alleged that an employer discriminated against a group of pregnant employees by failing to accommodate their pregnancy-related medical restrictions by allowing them to work light duty assignments under a temporary alternative duty program. Relying on the recent Supreme Court case (the ruling in Young v. United Parcel Service, Inc., 575 U.S. 206 (2015)), the District Court held that the EEOC must only show that the charging party’s employer accommodated others “similar in their ability or inability to work” and that employees can prove pretext “by providing sufficient evidence that the employer’s policies impose a significant burden on pregnant workers” and the employer’s “legitimate, non-discriminatory reasons are not sufficiently strong to justify the burden.” Because the EEOC failed to show whether and to what extent other injured employees (who were not injured on the job) were allowed to use the program, and, because pregnant employees and employees who were disabled (but not injured on the job) were apparently equally able to access the employer’s ADA accommodation policies, the District Court ruled in favor of the employer.

Development #3: A Return To The Basics In Female Employee And Applicant Discrimination

In EEOC v. Stan Koch & Sons Trucking, Inc., 2021 U.S. Dist. LEXIS 168297 (D. Minn. Aug. 30, 2021), the EEOC advanced a theory of liability that has flown under the radar in recent years. Specifically, the EEOC alleged that the use of a physical abilities test had a discriminatory impact on female applicants and introduced statistical evidence to prove its theory. The District Court ultimately concluded that the physical abilities test constituted “disparate impact” discrimination under Title VII, which prohibits facially neutral employment practices that fall more harshly on one group than another and cannot be justified by business necessity. The EEOC’s efforts to eliminate potential discrimination involving pre-employment screening tests has a long history. Those cases have fallen out of fashion somewhat as the EEOC has focused its attention on other ways that employers allegedly erect barriers to recruitment and hiring of certain groups. But the rise of third-party firms who offer assistance to employers in making employee selections could give rise to a new wave of these types of lawsuits. Employers who use such services must be certain that the methods they use are suited for their purpose and have been properly vetted for disparate impact.

Development #4: Pay Equity Continues To Loom As A Potent Source Of Discrimination Litigation

Lawsuits brought under the Equal Pay Act (“EPA”) tend to be highly fact-driven and therefore challenging for employers to dispense with through motion practice before trial. This is especially true when it comes to EEOC-initiated litigation. For example, in a recent case, EEOC v. University of Miami, 2021 U.S. Dist. LEXIS 186479 (S.D. Fla. Sept. 29, 2021), the EEOC alleged that the Defendant paid a female professor less than her male counterpart who performed the same job. The Defendant had hired the charging party as an associate professor during the same year that it hired a male professor with comparable qualifications for a lower-ranked position in the same department at a higher salary. The Defendant asserted that the EEOC could not establish a prima facie case of pay discrimination under the EPA because the professors had never performed substantially equal jobs. The District Court disagreed, finding that there remained a genuine issue of fact on this issue and as to whether the pay differential was based on factors other than sex.

Development #5: A Novel Procedural Issue Is Put To The Test

In EEOC v. Activision Blizzard, No. 21-CV-7682 (C.D. Cal. Dec. 20, 2021), the EEOC settled an enforcement lawsuit with an employer, and subsequently the California Department of Fair Employment and Housing (“DFEH”) objected to it. The District Court refused to allow the DFEH to intervene in the action and challenge the proposed consent decree and settlement on the ground that it had an interest in preserving potential state law claims against the Defendant. This ruling is the first time a federal court has decided whether to allow intervention on this basis, and the decision is certainly a favorable one for employers.  In this case, the EEOC filed suit on behalf of female employees alleging that they faced gender-based harassment and retaliation. The parties ultimately reached a settlement and proposed a consent decree that established a voluntary claims process. The DFEH sought to challenge the voluntary claims process because it claimed to have an interest in protecting its ability to prosecute its own parallel state court case against the Defendant. Since the consent decree released all state law claims, the DFEH claimed the consent decree would allow the Defendant to destroy evidence relevant to the DFEH’s state court case. The District Court disagreed and denied the motion. The District Court held that the interest actually belonged to those undergoing the claims process, not the DFEH, and if it were to accept the DFEH’s argument, the District Court would essentially be able to intervene in any employment action in the state. The District Court also reasoned it would be unlikely that it would ever enter a consent decree that would purport to allow or mandate destruction of evidence relevant to litigation.

Summing It All Up

In most respects, FY 2021 represented a return to form for the EEOC following a year of transition, stemming from significant changes to many of its programs in the midst of the global COVID-19 pandemic and significant leadership changes. The surge in the number of cases filed by the EEOC, particularly during the month of September, could mean that FY 2022 will be a much more litigation-intensive year. And, given the leadership changes that have rocked the agency over the past few years, it may also reveal a noticeable change in strategic direction as well. If so, employers should expect to see such new developments manifest themselves in the theories the Commission chooses to advance and the types of cases it files.

We will of course continue to monitor these developments, and we look forward to sharing our thoughts and analysis in the coming year.

Seyfarth Synopsis: In today’s video blog, Jerry Maatman discusses how, in 2021, the aggregate monetary value of workplace class action settlements exploded to an all-time high, as plaintiffs’ lawyers and government enforcement agencies monetarized their claims at the highest values we have ever tracked. Many employers and commentators alike expected the pandemic to depress the size and pace of settlements. Instead, the numbers show that the plaintiffs’ bar was successful in converting case filings into significant settlement numbers at higher levels during the pandemic than in any of the preceding years. Watch to learn more below!

By Gerlad L. Maatman, Jr.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The top 10 settlements in the private plaintiff statutory class action category (e.g., cases brought for breach of contract for employee benefits, workplace antitrust laws, or statutes such as the Fair Credit Reporting Act or the Worker Adjustment and Retraining Notification Act) skyrocketed in 2021 to a new high. The settlements totaled $1.671 billion, which represents a significant increase over every year from 2016 forward and a reversal of a downward year-over-year trend that began in 2018. The previous high water mark, set in 2017, was $487.28 million. In 2018, settlements tapered to $411.15 million, followed by $319.65 million in 2019, and $244.55 in 2020.

The following chart tracks these figures:

Employment discrimination class action settlements, on the other hand, showed a decrease in 2021, as compared to 2020. In 2021, the top 10 settlements totaled $323.45 million, as compared to $422.68 million in 2020. In 2020, the value of the top 10 largest employment discrimination class action settlements of $422.68 million was the highest figure reached since we began tracking numbers, and $76.28 million higher than the next highest year recorded (2010).

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

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

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

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

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

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

Seyfarth Exclusive! Live Webinar

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.

By Gerald L. Maatman, Jr.

Seyfarth Synopsis: Seyfarth’s 18th Annual Workplace Class Action Litigation Report analyzes 1,607 rulings and is our most comprehensive Report ever at over 840 pages.

Click here to access the microsite featuring all the Report highlights. You can read about the five major trends of the past year, order your copy of the eBook, and download Chapters 1 and 2 on the 2022 Executive Summary and key class action settlements.

The Report has become the “go to” research and resource guide for businesses and their corporate counsel facing complex litigation. We are humbled and honored by the recent review of our 2021 Annual Workplace Class Action Litigation Report by Employment Practices Liability Consultant Magazine (“EPLiC”) – the review is here. EPLiC said: “The Report is a must-have resource for legal research and in-depth analysis of employment-related class action litigation.” Further, the article noted that “No practitioner who deals with employment claims, whether as an underwriter, broker, risk manager, consultant, or attorney should be without it.”

EPLic stated: “The encyclopedic . . . Seyfarth Shaw Annual Workplace Class Action Litigation Report insightfully examines and analyzes an array of class action decisions. In addition, the federal cases examined in the Report are indexed by federal circuit – an invaluable feature that further enhances the Report’s utility. The Report is also available in e-Book format and is fully searchable.”

The 2022 Report analyzes rulings from all state and federal courts – including private plaintiff class actions and collective actions, and government enforcement actions –  in the substantive areas of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, and the Class Action Fairness Act of 2005. It also features chapters on EEOC pattern or practice rulings, state law class certification decisions, and non-workplace class action rulings that impact employers. The Report also analyzes the leading class action settlements for 2021 for employment discrimination, wage & hour, ERISA class actions, and statutory workplace laws, as well as settlements of government enforcement actions, both with respect to monetary values and injunctive relief provisions.

We hope our loyal blog readers will enjoy it!

Executive Summary

Over the past decade, workplace class action litigation has exploded relative to its prevalence and complexity. The class action mechanism provides skilled plaintiffs’ lawyers a tool to attempt to inflate the size and risk of litigation exponentially. The plaintiffs’ class action bar has seized on and expanded its use of this tool to grow its practice and has adopted an array of tactics to command and build increasing pressure and leverage.

Today, workplace class actions remain at the top of the list of challenges that business leaders face. An adverse judgment in a class action has the potential to bankrupt a company. Adverse publicity from a threatened or ongoing class action has the potential to eviscerate good will and market share. At the same time, negotiated resolutions have the potential to spawn copy-cat class actions and follow-on claims from multiple groups of plaintiffs’ lawyers who challenge corporate policies and practices in numerous jurisdictions at the same time or in succession. Compounding these risks, federal and state legislatures and administrative agencies continually add to a patchwork quilt of compliance challenges that shift and change with each administration, thereby bringing increased unpredictability.

Ever-attuned to the challenges facing business leaders, the plaintiffs’ class action bar has leveraged these risks into increasingly large pay-outs. Skilled plaintiffs’ class action lawyers and governmental enforcement litigators have continued to develop new theories and approaches to the successful prosecution of complex workplace litigation and enforcement lawsuits and have continued to convert the size and uncertainty of such litigation into settlements at increasing rates. This phenomenon was manifest in 2021 as the aggregate value of workplace class action settlements ballooned to an all-time high.

As a result, managing and combating workplace class action threats commands an evolving and strategic approach. The events of the past year demonstrate that the array of problems facing businesses are continuing to change and to become more complex. During 2021, the COVID-19 pandemic continued to inspire new laws and regulations, which led to new types of workplace issues and new class theories that are likely to influence the fabric of complex workplace litigation for years to come. The COVID-19 “return to work” effort, remote and hybrid work arrangements, and vaccination mandates spawned new challenges and new class action risks.

The impact of the pro-worker policies of the Biden Administration also took hold over the past year as the agencies under its charge effectively reversed many of the pro-business rules adopted by the Trump Administration. The Biden Administration rolled out policy changes that are continuing to take shape through executive orders, legislative efforts, agency rulemaking, and enforcement litigation. Contrary to the pro-business approach of the Trump Administration, many of these efforts expanded the rights, remedies, and procedural avenues available to workers and government enforcement agencies, and created an array of litigation and compliance challenges for businesses.

As we move into 2022 and beyond, employers should expect that the changing workplace, coupled with these stark reversals in policy, will expand enforcement efforts and have a cascading impact on private class action litigation. The combination of these factors presents increasing challenges for businesses to integrate their risk mitigation and litigation strategies to navigate these exposures.

While predictions about the future of workplace class action litigation may cover a wide array of potential outcomes, one sure bet is that the plaintiffs’ class action bar will continue to evolve and adapt to changes in legislation, agency rulemaking, and case law precedents. As a result, class action litigation will remain fluid and dynamic, and corporate America will continue to face new litigation challenges in the year to come.

An overview of workplace class action litigation developments in 2021 reveals five key trends.

Blockbuster Settlement Numbers

First, the aggregate monetary value of workplace class action settlements exploded in 2021 to an all-time high, as plaintiffs’ lawyers and government enforcement agencies monetarized their claims at the highest values we have ever tracked. Many employers and commentators alike expected the pandemic to depress the size and pace of settlements. Instead, the numbers show that the plaintiffs’ bar was successful in converting case filings into significant settlement numbers at higher levels during the pandemic than in any of the preceding years. After settlement numbers reached a high point in 2017, they plummeted to their lowest level ever in 2018 before experiencing a mild recovery in 2019. In 2020, settlement numbers continued their upward trend in several areas, signaling a return to prominence of these bet-the-company cases. This momentum continued in 2021, as class action settlement recoveries reached a new threshold. The top 10 settlements in various employment-related class action categories exceeded $3.19 billion in 2021, compared to $1.58 billion in 2020, $1.34 billion in 2019, and $1.32 billion in 2018. For wage & hour class actions, the monetary value of the top 10 private plaintiff settlements entered into or paid in 2021 reached $641.3 million. This amount represents a monumental increase from the 2020 total of $294.6 million, as well as the 2019 total of $449.05 million. For ERISA class actions, the monetary value of the top 10 private plaintiff settlements entered into or paid in 2021 totaled $411.05 million, more than the 2020 total of $380.10 million and the 2019 total of $376.35 million. The only areas of decline were private-plaintiff employment discrimination and government enforcement action settlements. The top 10 employment discrimination settlements garnered $323.45 million in 2021, as compared to settlement figures of $422.68 in 2020 and $137.35 million in 2019, and the top 10 government enforcement action settlements garnered $146.38 million, a sharp decline from the 2020 total of $241 million, but a significant jump from the 2019 total of $57.52 million.

Deluge Of Wage & Hour Litigation

Second, wage & hour litigation remained a sweet spot for the plaintiffs’ class action bar as it achieved high rates of success at both the certification and decertification stages. Based on sheer volume and statistical numbers, workers certified more class and collective actions in the wage & hour space in 2021 as compared to any other area of workplace law. While evolving case law precedents and new defense approaches resulted in many good outcomes for employers opposing class and collective action certification requests in 2021, the plaintiffs’ bar sustained its high rate of success on first-stage conditional certification motions in 2021 and markedly improved its rate of success on second-stage decertification motions. Perhaps due to the backlog resulting from pandemic-related court closures, the overall number of rulings increased in 2021, and plaintiffs prevailed on those first-stage motions at a rate exceeded only by the rate at which they prevailed in 2020. Of the 298 FLSA wage & hour certification decisions in 2021, plaintiffs won 226 of 279 conditional certification rulings (approximately 81%). As to second-stage decertification motions, plaintiffs prevailed at a similar rate in 2021 than in other years of the past decade. Plaintiffs lost 10 of 19 decertification motions (approximately 53%). By comparison, employers saw 286 wage & hour certification decisions in 2020, and plaintiffs won 231 of 274 conditional certification motions (approximately 84%) and lost six out of 12 decertification rulings (approximately 50%). By further comparison, of the 267 wage & hour certification decisions in 2019, plaintiffs won 198 of 243 conditional certification rulings (approximately 81%), and lost 14 of 24 decertification rulings (approximately 42%). By further comparison, there were 273 wage & hour certification decisions in 2018, where plaintiffs won 196 of 248 conditional certification rulings (approximately 79%) and lost 13 of 25 decertification rulings (approximately 48%). In sum, the plaintiffs’ bar successfully secured certification of wage & hour actions at an astounding rate in 2021, while their odds of clearing the decertification hurdle decreased slightly to 47%. We expect these numbers to rise ever further in 2022 with a more employee-friendly U.S. Department of Labor actively working to eliminate pro-business rules and shifting its regulatory focus toward a plaintiff-friendly agenda.

More Aggressive Government Enforcement Litigation

Third, the change of leadership in the White House translated directly to reversals in administrative agendas, as the Biden Administration’s enforcement authorities took steps to eliminate pro-business rules of the Trump Administration, thereby fueling skepticism regarding the continued weight of agency determinations. Voters elected to turn the White House from red to blue in November 2020 and, as a result, changes in numerous areas rolled out over 2021 that reversed Trump-era pro-business policies and sought to expand worker rights. The Department of Labor (“DOL”), in particular, withdrew or rescinded Trump-era rules, including the tip credit, joint employer, and independent contractor rules promulgated by the DOL during the Trump Administration. For example, after amending the DOL’s Field Operations Handbook in February 2019, the Trump DOL undertook formal rulemaking and, in late 2020, issued a final rule that would have allowed employers to take the tip credit for duties performed “for a reasonable time immediately before or after” a tipped duty. Before that final rule took effect, the Biden Administration delayed its effective date and then rescinded and replaced it with a more complicated, worker-friendly final rule that limited use of the tip credit effective December 28, 2021. Similarly, effective on March 16, 2020, the Trump DOL established a rule that set forth a four-factor balancing test for determining when a business would be considered the “employer” of a worker who simultaneously performs work for another business. The Biden DOL rescinded the Trump DOL rule, effective September 28, 2021, in favor of the more expansive and less predictable “economic reality” test applied by some courts. While the DOL acted swiftly to reverse course on many fronts with the change of administrations, other agencies continue to operate under Trump-appointed majorities and, as a result, have been slower to pivot. Likewise, the chair of the EEOC shifted with President Biden’s inauguration, and major rule shifts came through other avenues. On June 30, 2021, for example, President Biden signed a joint resolution narrowly passed by Congress to repeal a Trump-era rule that would have increased the EEOC’s information-sharing requirements during the statutorily mandated conciliation process. The agency’s filings over the past year reflect this state of affairs. For instance, after more than doubling its inventory of systemic filings between FY 2016 and FY 2018 (with 18 in FY 2016, 30 in FY 2017, and 37 in FY 2018), the EEOC’s systemic filings dropped to 17 in FY 2019, 13 in FY 2020, and 13 in FY 2021. Total filings followed a similar trajectory, with 136 in FY 2016, 202 in FY 2017, 217 in FY 2018, but only 149 in FY 2019, 101 in FY 2020, and 114 in FY in 2021. When the EEOC’s current leadership shifts away from a majority of Trump-appointed Commissioners in mid-2022, employers should anticipate a stark shift in the EEOC’s litigation enforcement program.

Continuing Impact Of COVID-19 On Class Actions

Fourth, COVID-19 class action litigation became more pervasive in reaching across new industries and spawning new challenges on the workplace class action front. The COVID-19 pandemic had a significant, continuing impact on all aspects of life in 2021. Its impact extended to the legal system in general and workplace class actions in particular. As we reported last year, in 2020, as state and local governments responded to the COVID-19 threat, many employers moved their employees to tele-work or work-from-home arrangements, many companies laid off or furloughed workers, and many businesses shut down or postponed critical operations. In 2021, as vaccines became widely available and state and local governments continued to manage the COVID-19 threat, many employers attempted to move their employees to “return to work” or “hybrid” work arrangements. Such developments prompted federal regulators to enact vaccine-or-test mandates and fueled employers to adopt or expand health screenings, temperature check protocols, and mandatory vaccination policies. These steps, in turn, led to waves of controversy as workplace class actions brought by states, employee advocates, unions, and employer groups erupted over regulatory actions and employer policies. Litigants challenged agency rule-making contending that it exceeded executive authority to regulate conditions of employment. These challenges have met mixed results, as courts have granted approximately 41% of requests for temporary restraining orders or preliminary injunctions to date. Other litigants have challenged employer policies on various grounds, including on the bases that they allegedly discriminated against employees by failing to provide disability or religious accommodations, or retaliated against workers who expressed COVID-related concerns or sought such accommodations. Such challenges have met a lower rate of success, as courts have granted approximately 82% of motions to dismiss such class claims in whole or part. In sum, the pandemic has continued to spike class actions (of all varieties) and litigation over all types of workplace issues. Employers are apt to see these workplace class actions continue to expand and morph in 2022 as the pandemic endures.

Assault On Arbitration Defenses

Fifth, workplace arbitration programs continued to influence the nature of class action litigation and shift the types of claims filed in 2021 as the plaintiffs’ bar continued to find ways to work around such obstacles. As employers clawed for cover from the increasing weight of workplace class action litigation in recent years, workplace arbitration continued to gain steam, aided by the U.S. Supreme Court’s transformative ruling in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018). Epic Systems reaffirmed that the Federal Arbitration Act requires courts to enforce agreements to arbitrate according to their terms, including mandatory agreements that provide for individual proceedings and include class action waivers. Bolstered by such precedents, more than half of non-union, private-sector employers and more than two-thirds of large employers have adopted mandatory arbitration agreements. Such programs have continued to shift class action litigation dynamics in critical ways as they have led to more front-end attacks on proposed class and collective actions and, as the result of such attacks, to the defense bar dismantling more workplace class and collective actions by fracturing those proceedings and diverting them into individual arbitrations. Over the past year, plaintiffs’ class action lawyers continued to attempt to find ways to attempt to end-run such agreements. These efforts took shape on multiple fronts. In 2021, the plaintiffs’ bar continued to shift its efforts toward claims more apt to be immune from such programs or toward populations less likely to have entered into agreements with defendants. This trend is illustrated by the spike in filings based on state laws that are not currently subject to arbitration, like the California Private Attorneys’ General Act (“PAGA”), which filings have quadrupled over the past decade and continued their upward trajectory during 2021. On a different front, advocates for workers and labor redoubled their efforts to shift this landscape by backing new legislation that would amend federal laws to ban mandatory arbitration agreements, depending on the bill, for employment, consumer, antitrust, civil rights, or sexual harassment disputes. In light of current administrative priorities, the future remains anything but clear as to whether arbitration programs will remain viable tools to counter proposed workplace class actions in the face of these continued attacks on Epic Systems.

Implications For Employers

In the ever-changing economy and patchwork quilt of laws and regulations, corporations face new, unique, and challenging litigation risks and legal compliance problems.

Adding to this challenge, the one constant in workplace class action litigation is change. Continuing a trend from 2020, 2021 was a year of great change, inside and outside of the workplace. As these issues play out in 2022, additional chapters in the class action playbook will be written.

The private plaintiffs’ bar are apt to be equally, if not more, aggressive in 2022 in bringing class action and collective action litigation against employers. They are likely to be aided by new worker-friendly rulemaking emanating from agencies within the executive branch.

These novel challenges demand a shift of thinking in the way companies formulate their strategies. As class actions and collective actions are a pervasive aspect of litigation in Corporate America, defending and defeating this type of litigation is a top priority for corporate counsel. Identifying, addressing, and remediating class action vulnerabilities, therefore, deserves a place at the top of corporate counsel’s priorities list for 2022.

By Jennifer A. Riley and Alex W. Karasik

Seyfarth Synopsis:  This week the U.S. Court of Appeals for the Seventh Circuit issued its long-awaited decision in Cothron v. White Castle Sys., No. 20-3202, 2021 U.S. App. LEXIS 37593 (7th Cir. Dec. 20, 2021), on whether claims asserted under Sections 15(b) and 15(d) of the Illinois Biometric Information Protection Act (“BIPA”) accrue only once upon the initial collection or disclosure of biometric information, or each time a private entity collects or discloses biometric information.  In lieu of answering the question, upon Plaintiff’s request, the Seventh Circuit certified the issue to the Illinois Supreme Court.

This ruling is a major development in the BIPA class action landscape, as the Illinois Supreme Court’s forthcoming ruling will likely have a major impact on statute of limitations defenses and damages calculations.

Case Background

Plaintiff alleged that shortly after she began working for White Castle in 2004, White Castle introduced a system that required employees to scan their fingerprints to access pay stubs and work computers.  Based on White Castle’s use of that system, Plaintiff alleged that White Castle violated Sections 15(b) and 15(d) of the BIPA.  Section 15(b) provides that a private entity may not “collect, capture, purchase, receive through trade, or otherwise obtain” a person’s biometric data without first providing notice to and receiving consent from the person.  Section 15(d) provides that a private entity may not “disclose, redisclose, or otherwise disseminate” biometric data without consent. Plaintiff brought a class action asserting these claims.

White Castle moved for judgment on the pleadings, arguing that the suit was untimely since the claim accrued in 2008 when the plaintiff’s first fingerprint scan occurred after the BIPA went into effect  Id. at 2.  Plaintiff countered that every unauthorized finger-print scan amounted to a separate violation of the statute, so a new claim accrued with each scan.  As such, Plaintiff argued that the lawsuit was timely for the scans within the limitations period.

The District Court rejected White Castle’s “one time only” theory of claim accrual and denied the motion.  Id.  However, the District Court found the question close enough to warrant an interlocutory appeal under 28 U.S.C. § 1292(b).  During the appeal, Plaintiff thereafter asked the Seventh Circuit to certify the question to the Illinois Supreme Court.

The Seventh Circuit’s Ruling

The Seventh Circuit agreed to Plaintiff’s request to certify the question to the Illinois Supreme Court, and directed it to answer the following question:  “Do section 15(b) and 15(d) claims accrue each time a private entity scans a person’s biometric identifier and each time a private entity transmits such a scan to a third party, respectively, or only upon the first scan and first transmission?”  Id. at *18-19.

White Castle argued that the District Court erred in denying its motion for judgment on the pleadings for two reasons.  First, White Castle invoked a special accrual principle applicable in cases involving defamation and other privacy torts known as the single-publication rule.  Second, White Castle argued that the Illinois Supreme Court’s reasoning in Rosenbach v. Six Flags 129 N.E.3d 1197, 1200 (Ill. 2019), actually pointed to the opposite conclusion, i.e., that Plaintiff was “aggrieved” only by the initial violations of sections 15(b) and 15(d).  Id. at 10.  The Seventh Circuit held that while White Castle offered “a plausible reading of the statute,” the relevant statutory language “does not clearly say that a claim accrues only once.”  Id. at 14.

Further, the Seventh Circuit opined that White Castle’s “one-and-done theory makes sense if we accept that subsequent collections or disclosures of biometric data do not work a harm that the Act seeks to prevent. And more importantly, focusing on what it means to be ‘aggrieved’ by a violation of the statute gives this theory a plausible hook in the statutory text.”  Id. at 14-15. However, the Seventh Circuit also observed that White Castle’s “theory also has some notable weak spots. The premise — two violations aren’t worse than one — may simply be wrong.”  Id.

Accordingly, the Seventh Circuit held that “the practical implications of either side’s interpretation, to the extent that Illinois courts would weigh them, do not decisively tilt one way or the other.”  Id. at 16.  The Seventh Circuit thus certified this issue to the Illinois Supreme Court.

Implications For Employers

Given that the BIPA statute does not have an explicit statute of limitations, the issue of claim-accrual may be dispositive for many pending and future BIPA class actions.  Further, the viability of recovering for each individual scan (as opposed to only the first scan) could have major implications for damages calculations.  Accordingly, employers should closely monitor this Illinois Supreme Court’s review of this case.

By Gerald L. Maatman, Jr.

Seyfarth Synopsis: Happy Holidays to all of our loyal readers of the Workplace Class Action Blog! Our elves are busy at work this holiday season in wrapping up our start-of-the-year kick-off publication – Seyfarth Shaw’s Annual Workplace Class Action Litigation Report. We anticipate going to press in early January, and launching the 2022 Report to our readers from our Blog.

This will be our 18th Annual Report, and the biggest yet with analysis of over 1,560 class certification rulings from federal and state courts in 2021. The Report will be available for download as an E-Book too.

We are humbled and honored by the recent review of our 2021 Annual Workplace Class Action Litigation Report by Employment Practices Liability Consultant Magazine (“EPLiC”) – the review is here. EPLiC said: “The Report is a must-have resource for legal research and in-depth analysis of employment-related class action litigation.” Further, the article noted that “No practitioner who deals with employment claims, whether as an underwriter, broker, risk manager, consultant, or attorney should be without it.”

EPLic stated: “The encyclopedic . . . Seyfarth Shaw Annual Workplace Class Action Litigation Report insightfully examines and analyzes an array of class action decisions. In addition, the federal cases examined in the Report are indexed by federal circuit – an invaluable feature that further enhances the Report’s utility. The Report is also available in e-Book format and is fully searchable.”

The 2022 Report will analyze rulings from all state and federal courts – including private plaintiff class actions and collective actions, and government enforcement actions –  in the substantive areas of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, and the Class Action Fairness Act of 2005. It also features chapters on EEOC pattern or practice rulings, state law class certification decisions, and non-workplace class action rulings that impact employers. The Report also analyzes the leading class action settlements for 2020 for employment discrimination, wage & hour, and ERISA class actions, as well as settlements of government enforcement actions, both with respect to monetary values and injunctive relief provisions.

With the country continuing to battle COVID-19 this year, workplace class action litigation took some interesting and unexpected turns.

Information on downloading your copy of the 2022 Report will be available on our blog in early January. Happy Holidays to everyone!