18th Annual Workplace Class Action Report - 2022 Edition

26 Annual Workplace Class Action Litigation Report: 2022 Edition The sixth year-over-year decrease in FLSA lawsuit filings in 20 years is noteworthy in and of itself, but it likely reflects the impact of the COVID-19 pandemic, as well as the growing prevalence of workplace arbitration programs in the wake of Epic Systems. Such programs are leading the plaintiffs’ bar to forego filing various lawsuits in court in favor of proceeding directly to arbitration. However, a peek behind these numbers confirms that with 5,238 lawsuit filings, 2021 was the tenth highest year ever in the filing of such cases (only eclipsed by levels from 2012 through 2020). When viewed on a continuum, as the numbers of certification rulings confirms, the current volume of wage & hour cases within the “pipeline” in the federal courts is as large and vast as ever. Employers may well see an increase in the number of FLSA filings in 2022. Various factors are contributing to the fueling of these lawsuits, including: (i) minimum wage hikes that took effect in 2020 and 2021, which increase the value of claims for unpaid wages; (ii) the intense focus on independent contractor classification and joint employer status, especially in the gig economy and franchisor-franchisee contexts; and (iii) a change in priorities at the DOL that has generated pro-employee shifts in rulemaking that expand eligibility for minimum wage and overtime compensation and, in turn, likely will fuel filings by the private plaintiffs’ bar. Layered on top of those issues is a host of uncertainties that arise from attempting to apply a New Deal piece of legislation to the realities of the digital workplace that no lawmakers could have contemplated in 1938. The compromises that led to the passage of the legislation in the New Deal resulted in ambiguities, omitted terms, and unanswered questions ( e.g. , the statute does not define “work”). These uncertainties abound under the FLSA, and the plaintiffs’ bar is capitalizing on the lack of clarity. Virtually all FLSA lawsuits are filed as collective actions; therefore, these filings represent the most significant exposure to employers in terms of any workplace laws. The nature of the certification mechanism under the FLSA contributes to the statute’s popularity among members of the plaintiff’s bar. Although conditional certification merely gives rise to a notice and opportunity to join or opt-in, the investment of time and expense required to achieve that end can be relatively minimal. Often plaintiffs file a motion for conditional certification at the outset of a matter with little to no evidence aside from a few declarations from current or former employees. By contrast, although certification of a Rule 23 class leads to broader participation, the front-end investment required to meet the requisite criteria is much higher. The plaintiffs’ bar has a diminished appetite to invest in long-term cases that are fought for years and that bring a higher rate of risk relative to the chances of a plaintiff’s victory. Hence, the numbers reflect the various differences in success factors in bringing employment discrimination and ERISA class actions, as compared to FLSA collective actions. An increasing phenomenon in the growth of wage & hour litigation is worker awareness. Wage & hour laws are usually the domain of specialists, but in 2021 wage & hour issues continued to make front-page news. The widespread public attention as to how employees are paid almost certainly contributed to the sheer number of suits. Big verdicts and record settlements also played a part, as success typically begets copy-cat actions. Yet, the pervasive influence of technology is also helping to fuel this litigation trend. Technology has opened the doors for unprecedented levels of marketing and advertising by the plaintiffs’ bar – either through direct soliciting of putative class members or in advancing the overall cause of lawsuits. Social media also allows for the virtual commercialization of wage & hour cases through the internet and digital technology. Against this backdrop, wage & hour class actions filed in state court also represent an increasingly important part of this trend. Most pronounced in this respect were filings in the state courts of California, Florida, Illinois, Massachusetts, New Jersey, New York, and Pennsylvania. These states have longer statutes of limitation for state law claims, exceedingly generous damages remedies for workers, and more plaintiff-friendly approaches to class certification, which in combination serve to make each state a “plaintiff-friendly” venue for workplace class actions. In particular, California continued its status in 2021 as a breeding ground for wage & hour class action litigation under the California Labor Code. For the eighth year out of the last ten, the American Tort Reform Association (“ATRA”) selected California as one of the nation’s worst “judicial hellholes” as measured by