The law firm of Seyfarth Shaw, known for its labor and employment expertise, just released its tenth annual Workplace Class Action Litigation Report. The report details the important trends in workplace litigation going into 2014 and analyzes “1,123 class action rulings on a circuit-by-circuit and state-by-state basis.”
The verdict, in a nutshell, is that the Supreme Court has bent over backward to protect businesses from these suits, but they still come up… and one category of workplace suit is even growing exponentially. Any guesses?
So what are businesses going to face out there this year?
“In the past two years, we have seen a combination of Supreme Court decisions help create a defensive barrier for employers in class action cases,” said Seyfarth’s Gerald L. Maatman, Jr., co-chair of its Class Action Defense group and author of the Report. “Enough time has passed, however, that plaintiff lawyers have begun to breach this barrier with new theories and approaches and, combined with increasing and aggressive government enforcement litigation, employers may once again find themselves facing bet-the-company-type class actions in 2014.”
More than any other development in 2013, Wal-Mart Stores, Inc. v. Dukes continued to have a wide-ranging impact on virtually all class actions pending in federal and state courts throughout the country. Many Rule 23 decisions in 2013 pivoted off of Wal-Mart and leverage points in class action litigation increased or decreased depending on the manner in which judges interpreted and applied Wal-Mart.
Even though lawyers may be finding new ways to file class actions, most categories of suit are on the decline. For example, the report notes that the number of employment discrimination cases fell to 12,311 cases, off almost 2,000 from the 2012 number. However, on the upswing are wage and hour claims:
“I think for employers, the very interesting takeaway is that in the last 10 years, the amount of wage and hour cases that have been filed has just exploded,” Maatman told Insurance Business. “Everyone is waiting for the wave to crest. It certainly didn’t in 2013, and I believe there will be more in 2014.”
Wage and hour lawsuits resulted in settlements of $248.45mn, the Seyfarth report found, fueled largely by “continued dislocations in the economy” in 2013.
Wage and hour lawsuits arise when businesses allegedly underpay their workers, either because they were wrongly listed as ineligible for overtime, or because they simply never received the money they worked for.
The trend presents a marked difference from the lawsuit landscape 10 years ago, Maatman noted, when employment practices lawsuits comprised eight out of 10 workplace suits. Today, wage and hour make up nine out of 10 cases.
So are wage and hour suits the biggest risk facing businesses? Well, that’s one way to look at it. The other is, “Just don’t do anything illegal.” Look, there are a lot of frivolous lawsuits in the world, and tons of them target businesses, but wage and hour claims aren’t “employee said-employer said” suits that invite ambiguity and potential abuse (not to say discrimination or harassment suits are necessarily frivolous, just that there is more potential for abuse there). The fact that the new rage in workplace litigation involves a rash of underpaid employees says something about the trend of businesses exploiting desperate employees. We’ve devoted a good deal of digital ink to how the legal industry is preying on that desperation, so imagine what other industries are doing.
Just pay your employees! OK, it’s obviously slightly more complicated than that, but making a proactive trip to legal counsel can keep the payroll on the up-and-up and keep businesses out of court. A competent labor lawyer can explain overtime rules in his or her sleep.
So that’s what lawyers should take away from this report: businesses out there need to know that good advice now can save a hefty settlement down the road.
Seyfarth Shaw January 7, 2014 Press Release [Seyfarth Shaw]
Greatest risk for workplace lawsuits in 2014 revealed [Insurance Business America]