Workplace Class Action Settlement Values Plummeted in 2018
Author: Robert S. Teachout, XpertHR Legal Editor
January 14, 2019
The monetary value of the top 10 class action case settlements dropped by more than 50 percent in 2018 and the value of the top 10 government litigation settlements fell by 74 percent despite an increase in the number of workplace class action certifications, according to the 2019 Annual Workplace Class Action Litigation Report.
The Seyfarth Shaw report detailed five trends from the past year that employers should be aware of going into 2019:
The Supreme Court reshaped the employment law and class action dynamic. Most significantly, the recently-released report found the Supreme Court's Epic Systems ruling, upholding the legality of class action waivers in mandatory arbitration agreements, to be transformative for employers.
"Epic Systems may turn out to be one of the most important workplace class action decisions over the last several decades in terms of its ultimate impact on litigation dynamics," said Gerald Maatman Jr., a partner in Seyfarth Shaw's Chicago office who authored the report. "The Supreme Court's ruling removes the last significant potential legal hurdle in an employer's ability make a class action waiver a mandatory condition of employment."
Government enforcement was up, but settlement values were down. Government enforcement litigation rose to a new three-year high in 2018, with the EEOC filing 199 lawsuits, up from 184 in 2017. But the value of the top government enforcement settlements plunged, dropping from $485.25 million in 2017 to $126.7 million in 2018.
However, as more Trump appointees are approved in 2019 and can pursue the administration's business-friendly priorities, employers can expect less aggressive enforcement of employment-related laws and regulations by the Equal Employment Opportunity Commission (EEOC), Department of Labor and the National Labor Relations Board, said Maatman.
Certification of class action lawsuits reached a record high. Plaintiffs were successful in certifying wage and hour cases for collective action at a 79 percent rate, the highest in the report's 15-year history. At the same time, employers' efforts to successfully decertify these cases dropped by 11 percent, with only 52 percent of decertification motions approved in 2018, compared to 63 percent in 2017.
The value of class-action settlements dropped by more than half. After an all-time record high in 2017 of $2.72 billion, the monetary value of the top workplace class action settlements sank to a five-year low of $1.32 billion in 2018. The one-year drop of $1.4 billion reflected a decrease of more than 50 percent. Even as employees experienced a better class certification success rate in 2018, they were unable to monetize class action victories at the same rate as 2017.
The #MeToo Movement began to make its impact. 2018 provided the first annual look at the momentum that the #MeToo movement is gaining in workplace litigation. The EEOC targeted sex-based discrimination in 74 percent of its filings during the past year, up from 65 percent the previous year. Sexual harassment claims also increased by 24.5 percent, from 33 lawsuits in 2017 to 41.
Maatman advises employers to keep a close eye on how the sexual harassment case law develops in 2019 and beyond. "It is often in times like these - when the attention of the nation and key federal agencies is intently focused on an issue - that the law tends to develop rapidly to meet new challenges," he said.