Workplace Class-Action Settlement Values Drop


By Robert S. Teachout, SHRM-SCP January 25, 2019
Workplace Class-Action Settlement Values Drop

​Workplace class-action settlement values dropped sharply in 2018, according to law firm Seyfarth Shaw's 2019 Workplace Class Action Litigation Report

Gerald Maatman Jr., an attorney in Seyfarth Shaw's Chicago office and author of the report, attributed the drop to overall corporate compliance efforts over the past decade. "Organizations spent more time, effort and money focusing on compliance, making themselves less of a target to sue and making it easier to defend claims," Maatman said.

The decreased settlements may also be attributed to the 2018 Epic Systems Supreme Court decision, which tipped the balance in favor of employers in class actions.

But Jonathan Segal, a partner with Duane Morris LLP in Philadelphia, cautioned that "government agencies—particularly the EEOC [Equal Employment Opportunity Commission]—continue to enforce federal laws."

A Drop in Settlement Amounts

Overall settlement values in 2018 dropped dramatically compared to an all-time high in 2017.

As measured by the top 10 largest case resolutions in various workplace class-action categories, settlements of wage and hour class actions decreased in value by more than 50 percent (from a sum of $525 million in 2017's top 10 largest wage and hour class actions to $253 million in 2018), ERISA class actions saw a 66 percent decrease (from $927 million in 2017 to $313.4 million in 2018), and government enforcement litigation plummeted by 74 percent (from $485.2 million in 2017 to $126.7 million in 2018).

[SHRM members-only toolkit: Complying with U.S. Wage and Hour Laws and Wage Payment Laws]

Influential Supreme Court Ruling

The Epic Systems decision, the landmark 2018 Supreme Court ruling, allowed employers to require class-action waivers in employment arbitration and will have far-reaching effects.

The ruling removed the last significant potential legal hurdle in an employer's ability to make a class-action waiver a mandatory condition of employment, and thus protect itself against most forms of costly workplace class actions, Maatman said. The Epic Systems ruling "may turn out to be one of the most important workplace class-action decisions over the last several decades," he stated.

Segal noted that although employers under Epic Systems now have the choice to prohibit collective actions in arbitration, that does not mean they should automatically elect that choice. "Employers need to be more deliberate and less reflexive on this issue," he said, pointing out that prohibiting collective actions in arbitration may result in hundreds of individual arbitrations.

#MeToo Movement Makes an Impact

Despite the fall in class-action settlement values, the #MeToo movement is fueling employment litigation in workplace class-action litigation, according to the report.

The EEOC has focused on #MeToo issues with more intensity than ever before. Of the 2018 sex-discrimination filings, 41 included claims of sexual harassment, an increase of nearly 25 percent over the 33 sexual-harassment claims filed the year before.

[SHRM members-only toolkit: Managing Equal Employment Opportunity]

Segal said the increase in #MeToo claims, not just at the EEOC but by individual plaintiffs, is not surprising. The issue is not going to go away, nor should it, Segal said. "Employees will not tolerate now what they never should have had to tolerate before," he said.

According to Segal, a strong anti-harassment policy, a robust complaint procedure and effective supervisory training are still not enough to combat workplace harassment. "Compliance and culture must be married to create cultures where respectful behavior is the norm," he said.

Robert S. Teachout, SHRM-SCP, is an XpertHR legal editor in Washington, D.C. 

[Visit SHRM's resource page on workplace harassment.]


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