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Rise in workplace class-action litigation looms: Experts

class action

The COVID-19 pandemic will generate more workplace class-action litigation this year, particularly for wage and hour issues, experts warn.

There has been a significant increase in the size of aggregate class-action settlement recoveries, particularly last year, and the trend is expected to continue.

Based on the top 10 largest case resolutions in various workplace class-action categories, settlements totaled $1.58 billion in 2020 and $3.62 billion in 2021, compared with $1.34 billion in 2019, according to Seyfarth Shaw LLP’s Annual Workplace Class Action Litigation Report: 2022 Edition.

 “The big issue is, you’ve got the Biden administration that is very, very pro-worker, pro-regulation, and so you’re going to have government enforcement actions that are very much aligned with the plaintiffs class-action bar,” which will lead to an uptick in filings, said Gerald Maatman, a partner with Seyfarth Shaw in Chicago.

COVID-19 will contribute to the expected increase this year, experts say.

Employers’ efforts to comply with various COVID-19-related obligations “presents uncharted territory, as far as potential class-action claims,” said Gregory P. Abrams, a partner with Faegre Drinker Biddle & Reath LLP in Chicago, who represents employers.

“COVID has opened up all-new vistas for the plaintiffs bar,” said Lisa A. Schreter, a shareholder with Littler Mendelson P.C. in Atlanta.

For example, a California appeals court ruled in See’s Candies Inc. v. Ek, that South San Francisco-based See’s Candies must face a lawsuit filed by an employee who alleged she caught COVID-19 at work and gave it to her husband, resulting in his death.

“It appears to allow what we call ‘take home’ COVID cases, at least at the pleading stage,” and “is certainly not good news for employers if that reflects a larger trend that we see in California of more of those claims,” Ms. Schreter said.

Among traditional litigation issues being applied to the pandemic is religious discrimination, which may be asserted by workers who face consequences if they refuse to be vaccinated, Tao Leung, a partner with Hogan Lovells US LLP in Los Angeles.

The recent U.S. Supreme Court decision blocking a COVID-19 vaccine-or-test mandate for large employers could result in charges that employers do not have enough safety measures in place, because it could open companies up to exposure to charges of spreading the virus, said Adam Kemper, Fort Lauderdale, Florida-based partner with Kelley Kronenberg PA.

“As long as COVID’s around and employers continue to keep employees in close contact with each other to where they’re interacting” there is “always going to be a degree” of this risk, he said.

Meanwhile, wage and hour litigation continues to be “the hot, driving edge of class actions,” said Paul E. Starkman, a member of law firm Clark Hill PLC in Chicago.

Situations such as a traveling salesperson who is now working at a company facility or job duties being shifted because of workers calling in sick could result in employees being newly entitled to overtime pay under the Fair Labor Standards Act and create exposure for employers if salaries are not appropriately adjusted, Mr. Kemper said.

“The way in which people are paid is still the No. 1 pressure point,” Mr. Maatman said. People working from home will raise questions as to when the workday starts and ends, he said.

However, plaintiff attorney David Sanford, of Sanford Heisler Sharp LLP, in Washington, said fines for wage and hour violations are insufficient to deter some employers because even if they are eventually caught, a fine will still cost less than would obeying the statute.

Experts also point to the “‘great resignation” — in which many employees have voluntarily left their jobs during the pandemic, creating labor shortages — as a factor that will contribute to more lawsuits being filed. Workers are more willing to participate in class actions, and plaintiffs attorneys are “harvesting the low-hanging fruit when employers don’t follow wage and hour rules,” Mr. Starkman said.

There has been a shift in the balance of power between workers and their companies, said Ian Carleton Schaefer, chair, New York employment and labor, at Loeb & Loeb LLP in New York.

“When someone sees something out of order or out of compliance,” they have no fear “of acting individually or collectively because they know there are plenty of jobs out there,” he said. “It’s a lower-risk proposition.”

Another issue is nonuniform laws. Plaintiffs attorneys will take advantage of the “complicated patchwork” of employment-related laws, said Jason E. Reisman, a partner with Blank Rome LLP in Philadelphia.

He pointed to a July 2021 ruling by the Pennsylvania Supreme Court in Re:, Inc. that held, in part, there is no “de minimis” exception under Pennsylvania’s wage laws, which means employers must pay workers for even minimal amounts of time, such as minutes spent going through screening. This is not the case under the FLSA.

Another concern is privacy-related litigation, including litigation surrounding the Illinois Biometric Information Privacy Act. Illinois remains the only state that permits individuals to pursue litigation under a private right of action, although New York City has enacted such legislation. 

Experts say it has already led to considerable litigation in Illinois and will lead to more lawsuits if other states adopt it.