Workplace Class Action Settlement Values in 2020 Increased While Government Lawsuits Slowed
Author: Robert S. Teachout, XpertHR Legal Editor
January 15, 2021
Although government enforcement litigation of employment laws decreased in 2020, the number and monetary value of workplace class action and collective action settlements increased, according to the 17th Annual Workplace Class Action Litigation Report, a report by law firm Seyfarth Shaw that tracks and analyzes class action litigation data.
The report points out the impact the COVID-19 pandemic exerted in creating new challenges and new laws last year, which led to new types of workplace issues, along with new class action theories. The cases decided in 2020 may foreshadow the direction of class action litigation in the coming year when those new theories are likely to become part of the fabric of complex workplace litigation.
"One certain conclusion is that employment law class action and collective action litigation is becoming ever more sophisticated and will continue to be a source of significant financial exposure to employers well into the future," said Gerald Maatman, a partner in Seyfarth's Chicago office. "Employers also can expect that class action and collective action lawsuits increasingly will combine claims under multiple statutes."
The report found five key trends in 2020:
- The COVID-19 pandemic disrupted the legal system in general and workplace class actions in particular. Class actions of all varieties spiked and for all types of workplace issues. The pandemic also changed the pace of litigation, creating a roadblock to the orderly disposition of claims. As a result, Maatman expects class actions from the pandemic to challenge employers for years to come.
- Wage and hour class and collective actions had a higher rate of initial certification in 2020 than in any other year of the past decade, indicating that wage and hour remains a sweet spot compared to other areas of workplace law. Despite the pandemic's crippling impact on court operations, Maatman noted that courts issued more rulings on wage and hour certification issues in 2020 than in each of the past five years. He expects the number of cases to explode in 2021 when a more employee-friendly US Department of Labor (DOL) makes wage theft an enforcement priority.
- The pace of government enforcement litigation slowed in 2020. The DOL and its Office of Federal Contract Compliance Programs (OFCCP) and the Equal Employment Opportunity Commission (EEOC) shifted away from the use of litigation enforcement programs last year and instead increased their use of settlements. This approach will likely change significantly under the Biden administration, according to the report.
- Counterintuitively, the monetary value of class action settlements increased. Plaintiffs' lawyers and government enforcement actions brought in more money in 2020 than in 2019. "Many thought the pandemic would depress the pace and size of settlements in the new "cash is king" approach to the business cycle," said Maatman. "Instead, workplace class action litigation defied those odds and demonstrated that the plaintiffs' bar converted case filings into significant settlement numbers."
- The events of 2020 showed that change is the new normal and will be a constant in the next year. With a change in administration from Republican to Democrat, employers are likely to see an expansion of workers' rights, increased regulation of businesses and aggressive enforcement of workplace laws during the next four years. With that change in direction, advocates for workers and labor are expected to ramp up litigation activities. With Democrats also regaining control of the Senate, efforts to overturn the Epic Systems regime of workplace arbitration agreements with class/collective action waivers may gain traction and eventually succeed.