Legal Trends

Employment Law Outlook

Litigation against employers continues to rise.
By: | April 4, 2016

Employers in the United States faced a record number of class-action lawsuits in 2015, with more than 1,300 rulings across the nation.

The financial risks of such cases are enormous, with the monetary value of employment-related class-action settlements reaching an all-time high in 2015. The top 10 settlements alone totaled nearly $2.5 billion, according to the “12th Annual 2015 Workplace Class-Action Litigation Report,” by Chicago-based law firm Seyfarth Shaw.

The last several years have been transformative in class-action litigation involving workplace issues, said Gerald Maatman Jr., partner and co-chair of the complex discrimination litigation practice group at Seyfarth Shaw.

There’s been a sharp turnaround from the “sigh of relief” that resulted from the Supreme Court’s landmark 2011 “Dukes v. Walmart” case that changed the standards by which lawyers could certify class-action lawsuits.

“For the first couple of years, as “Dukes” began to take hold … a lot of people thought class-action law had become pro-defense and anti-plaintiff,” said Maatman.

“The smartest thing an … executive can do is take a look at the EEOC’s strategic enforcement plan … .” —J. Randall Coffey, partner, Fisher & Phillips LLP

“It came home to roost in 2015 that is no longer true and the manner in which cases are brought has changed such that the plaintiff’s bar is now enjoying success in bringing, prosecuting and settling cases.”

While the Supreme Court has fashioned a “complex tapestry of both pro-worker and pro-business rulings,” according to Seyfarth Shaw, federal agencies, such as the Equal Employment Opportunity Commission, Department of Labor and National Labor Relations Board have been pushing the envelope. Several themes have emerged that may help executives mitigate their organization’s risk:

Continued Scrutiny of Hiring Policies and Practices: Recent litigation has focused on criminal history, but the EEOC has been closely scrutinizing other pre-employment hiring practices, such as testing and assessments.

Expansion of Pregnancy Discrimination Claims: EEOC guidance issued in the aftermath of the “Young v. UPS” ruling makes it clear that failing to accommodate pregnant employees may expose employers to ADA claims, based on temporary disability caused by pregnancy.

Evolution of Religious Discrimination Claims: The scope of reasonable accommodation for religious practices has the potential to impact grooming and appearance policies, as well as requested time-off policies.

Broad Interpretation of LGBT Rights in the Workplace: The EEOC has announced its intention to protect workers from discrimination on the basis of sexual orientation and/or gender identity by defining such discrimination as an allegation of sex discrimination under Title VII.

J. Randall Coffey, partner, Fisher & Phillips LLP

J. Randall Coffey, partner, Fisher & Phillips LLP

The EEOC has been “actively looking for cases to push their arguments about the scope of Title VII,” said J. Randall Coffey, a partner at Fisher & Phillips LLP.

And they’ve made a start. Two cases filed in Pennsylvania and Maryland on March 1 are the first to allege sex discrimination under Title VII.

Increased Scrutiny of Independent Contractor Classification: Pointing to the 2015 “Alexander v. FedEx Ground Package System” independent contractor misclassification case that resulted in a $228 million settlement, Maatman predicts a significant increase in “copycat cases” in 2016.

“If you are labeling people as independent contractors and not paying them benefits or overtime, but otherwise treating them as employees, you may owe them back pay or benefits,” he said.

The average cost of defending against an employee lawsuit tops $150,000, said Maatman. Employers can reduce the risk of becoming a target by keeping tabs on what kinds of claims are being levied, said Coffey. Focus on the “hot spots” to stay ahead of the curve, reducing the risk of costly litigation.

“The smartest thing an … executive can do is take a look at the EEOC’s strategic enforcement plan because it’s a roadmap to which specific areas the agency is going to focus its enforcement activities on,” said Coffey.

“If you have concerns about whether you are in compliance with the law, you can scrutinize the list to make sure your policies and practices are up to snuff.” &

Julie Cook Ramirez is a long-time journalist. She can be reached at [email protected]

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