Wage and Hour Class Action Boom Called Likely to Last

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By Kevin McGowan

The number of wage and hour class lawsuits filed in federal court dipped slightly during 2016, but employers should expect a rebound in 2017, according to a management lawyer who tracks workplace class actions.

The 8,304 Fair Labor Standards Act collective actions filed was down, compared with 8,954 such lawsuits filed in 2015, said Gerald Maatman, a Seyfarth Shaw LLP partner who is co-chair of the firm’s class action litigation practice group.

But the 2015 figure was the highest since the firm formally began tracking employment law class actions in 2004, and the 2016 total is the second-highest, Maatman told Bloomberg BNA.

The top 10 wage and hour settlements reached in 2016 totaled $695.5 million, up from $463.6 million in 2015, Maatman said.

The long-term growth in class lawsuits against employers alleging violations of minimum wage, overtime and other wage and hour requirements isn’t stopping anytime soon, he said.

The Trump administration could curtail Labor Department FLSA enforcement, but the private plaintiffs’ bar in 2017 likely will “fill the void” with another bumper crop of wage and hour class litigation, Maatman said.

Report Tracks Class Activities

Maatman made his comments as Seyfarth Shaw released its 13th annual report analyzing employment class actions filed and settlements reached in the preceding year.

They include class claims under the FLSA, Title VII of the 1964 Civil Rights Act, the Age Discrimination in Employment Act, the Employee Retirement Income Security Act and other federal laws applying to workplace issues.

The report also includes decisions and settlements involving state wage and hour claims, breach of contract claims and other state employment laws.

The number of employment-related class lawsuits filed in 2016 was flat compared with the previous year, the report said. The top 10 employment-related class action settlements in 2016 totaled $1.75 billion, a significant drop from a record-high $2.48 billion in 2015, the report said.

Bias Class Claims Tougher to Try

Fewer employment discrimination class actions are being filed, the report said.

Plaintiffs’ lawyers litigating large discrimination cases face substantial costs for expert witnesses and discovery before even getting to the class certification stage, Maatman said. Then, it’s a “coin toss” whether a court will certify a class, he said.

In contrast, courts grant at least conditional certification in FLSA collective actions about 75 percent of the time, Maatman said.

Plaintiffs’ lawyers in wage and hour cases don’t need to spend money on an expert or extensive discovery to reach the “holy grail” of class certification, which puts enormous pressure on employers to settle, he said.

Pay Bias the Hottest Area

The discrimination class lawsuits that are being filed tend to be sex or race suits alleging pay bias.

“That’s where all the action is,” said Gary Siniscalco, who is senior counsel with Orrick Herrington & Sutcliffe in San Francisco.

Workers seeking class certification under Rule 23 of the Federal Rules of Civil Procedure face potential obstacles in identifying “common issues,” Siniscalco told Bloomberg BNA Jan. 13.

That’s because different managers are making separate hiring, promotion and compensation decisions, he said. After the U.S. Supreme Court’s 2011 decision in Wal-Mart Stores Inc. v. Dukes, workers face an uphill battle in class certification of discrimination claims.

The Equal Employment Opportunity Commission during the Obama administration emphasized the investigation, development and litigation of large-impact cases, including those alleging sex or race bias in compensation.

The EEOC will “stay the course” in that respect during the Trump administration, Siniscalco predicted.

Regardless of whether the Obama administration was effective in addressing the gender or race pay gap, the reality is that “virtually every employer” now is focused on doing internal compensation audits to find and address disparities, Siniscalco said.

He is co-chair of Orrick's EEO and OFCCP compliance group.

Supreme Court Looms Large

A Supreme Court decision on whether class action waivers in employment arbitration agreements are enforceable could go a long way in determining the future of workers’ class suits, said Shannon Liss-Riordan, a partner with Lichten and Liss-Riordan in Boston, who represents workers.

The top issue currently affecting class lawsuits is courts’ “increasing endorsement” of class action waivers, Liss-Riordan told Bloomberg BNA Jan. 18.

The Supreme Court Jan. 13 agreed to review whether such waivers violate the National Labor Relations Act because they curtail workers’ rights to engage in “concerted activities” over wages and other workplace conditions.

If the justices decide class action waivers are enforceable, then workers’ only recourse would be to file “mass numbers” of individual arbitration claims, Liss-Riordan said.

That “would have the most profound impact” on the enforcement of wage and hour laws, she said.

The Supreme Court previously has approved businesses’ use of class action waivers in arbitration affecting consumer protection and antitrust claims.

Defense attorneys “seem to be taking it as a given” the court also will uphold class action waivers in employment, Liss-Riordan said.

But it’s not entirely clear the justices who upheld class action waivers in the consumer and antitrust contexts necessarily will do so in employment, she said.

The NLRA’s “concerted activities” language isn’t the only federal law that protects workers’ rights to join together to enforce workplace laws or improve their working conditions, Liss-Riordan said.

There’s an argument to be made that the FLSA itself, with its collective action provision, also provides workers with statutory rights to act as a class that can’t be waived, she said.

Gauging the GOP Effect

The Labor Department’s level of enforcement activity “doesn’t really have a big effect” on how many wage and hour lawsuits private attorneys file, Liss-Riordan said.

So a Trump administration that cuts back on FLSA enforcement wouldn’t directly influence how many lawsuits private lawyers pursue, she said.

But Labor Department wage and hour regulations, or abolishing such rules, could have a big effect on private lawsuits, Liss-Riordan said.

Employers shouldn’t have a false sense of security just because Republicans will control the White House and Congress, Maatman said.

The alleged wage and hour violations still are out there and if the government recedes as an enforcement agent, someone else will “police” the workplace, he said.

A Republican administration, coupled with workers’ increased awareness of wage and hour issues, could mean plaintiffs’ lawyers increase their litigation activity, Maatman said.

The courts in states perceived as worker-friendly—such as California, New Jersey, New York and Pennsylvania—also could see more class actions filed, he said.

For the plaintiffs’ bar, “there’s more than one way to skin a cat,” Maatman said.

To contact the reporter on this story: Kevin McGowan in Washington at kmcgowan@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

For More Information

The first two chapters of the Seyfarth Shaw report are available at http://src.bna.com/lxW .

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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