Dive Brief:
- Labor and employment class action lawsuits are the most common type of class actions, according to the 2019 Carlton Fields Class Action Survey. Labor and employment, consumer fraud, product liability and antitrust matters accounted for 75% of class action spending in 2018, according to the survey. Carlton Fields garnered responses from general counsel or senior legal officers at 395 Fortune 1000 and other large companies in a variety of industries including banking and financial services, consumer goods, energy, high tech, insurance, manufacturing, pharmaceuticals, professional services and retail.
- Of the companies surveyed, more than a quarter reported involvement in a labor and employment class action lawsuit in 2018. Spending on the cases comprised 26.1% of class action spending in 2018, Carlton Fields found. The firm noted that "in the past five years, nearly two-thirds of companies have faced at least one labor and employment class action, and, overwhelmingly, companies report that wage and hour matters are their top concern in this category."
- Overall, organizations spent $2.46 billion in 2018 defending against class actions, the survey revealed. Though the number of employers that faced a class action dropped in 2018, the average number of matters per employer went up, Carlton Fields said.
Dive Insight:
This survey supports the results found in Seyfarth Shaw LLP's 14th annual Workplace Class Action Litigation Report that showed 1,408 wage and hour class action settlements in 2017 — a record high. Another record number could be on the way, with a 4% increase in labor and employment class actions between 2018 and 2017 outlined in the Carlton Field report.
A wide range of organizations contend with or have recently settled class action wage and hour claims this year. Delta agreed in January to pay $2.3M to settle a background check dispute, IKEA was hit with a fifth lawsuit alleging age discrimination in February and Booz Allen and other contractors were hit with no-poach class actions in February.
One way for employers to approach class action lawsuits and, perhaps, avoid the possibility of multimillion-dollar collective action awards, is to require workers to arbitrate cases individually. Last spring, the U.S. Supreme Court upheld the employer's right to do just that, and more seem to be jumping on the arbitration bandwagon. The Carlton Fields survey noted that more employers reported using arbitration clauses to bar class actions than in any previous survey, mainly, they said, to contain the costs of litigation. However, forced arbitration can lead to backlash from workers.
Legal experts caution that arbitration isn't a "one-size-fits-all" solution and, as a result, employers shouldn't rush to put arbitration agreements in place. They note that arbitration can be more expensive than most employers realize and things such as the loss of appeal rights and barriers posed by state law must be taken into consideration. In addition, employers could face a backlash because of the perception that they are forcing employees into "secret one-on-one arbitration," one expert said, explaining that members of the #MeToo movement allege serial sexual harassers use confidential arbitration proceedings to evade detection and publicity.
