While employers across America paid a record amount in settlements for workplace violations last year, don’t expect it to be the beginning of a trend. Think of it more as the storm before the calm, as labor lawyers rush to lock in payouts ahead of a shifting legal landscape.
Settlements from the 10 biggest class-action lawsuits reached a record $2.72 billion in 2017, the highest amount since the law firm Seyfarth Shaw began cataloging litigation accords in 2003. Cases filed by federal agencies empowered to sue over discrimination and hour, wage, and safety violations were among the most prominent in a litigation sector also filled with private practitioners seeking to recover damages on behalf of employees.
“The government litigated more cases, filed more cases, and got higher settlement values for those cases in 2017 than at any time in the last decade,” said Gerald Maatman, Jr., co-chair of the class action defense group at Seyfarth Shaw, which represents companies. But the reasons behind those record numbers map out a darkening horizon for labor litigators and workplace rights advocates.
The prospect of a more business friendly administration has changed their tactics, company lawyers said. President Donald Trump took office a year ago, but the U.S. Labor Department, Equal Employment Opportunity Commission, and other government agencies that litigate workers’ cases have been slow to staff up. In the meantime, lawyers in and out of government have been scrambling to get as much as they could for workers while they can.
“As far as class action wins and the size of those wins, I would expect those both to go down”
“I think that what we see is a race to settle,” said Paul DeCamp a lawyer at Epstein Becker & Green who represents employers. “I’ve seen it in my practice. Cases that plaintiffs’ counsel felt very strongly about and seemed more bullish and willing to go to trial, since the election they were more eager to settle those cases.”
Seyfarth’s Maatman said he has received more calls from government attorneys wanting to settle. “Typically, they wouldn’t do that,” he said, explaining that in the past some of these cases may have been worth taking to trial. But times have changed. They think “better to settle now than wait for changes [to the administration].”
Unsurprisingly, litigating workers can expect far fewer payouts this year, said Paul Secunda, Director of Marquette Law School's Labor and Employment Law Program. “As far as class action wins and the size of those wins, I would expect those both to go down,” he said. During the Obama administration, Secunda served on the U.S. Department of Labor’s advisory council on employee benefits law, eventually becoming chairman.
“In a Democratic Department of Labor, you’re going to have more enforcement actions; they tend to use the stick more than the carrot,” he said. “And then in Republican administrations, it’s just the opposite.”
“There’s definitely going to be a fairly abrupt fall-off on enforcement activity,” said Secunda. While there might be an uptick in sexual harassment lawsuits as a result of the #MeToo movement, “they tend to be more individual [cases] than class cases.”
But even before the change in administrations, things didn’t look good for employee class actions. Companies are increasingly asking workers to surrender their right to pursue workplace claims in court as a prerequisite for employment, and have been successful in defending that tactic. More than half of non-union private-sector employers make their workers sign mandatory arbitration agreements, according to a report last year from the Economic Policy Institute.
And as far as the courts are concerned, labor advocates have another reason to be pessimistic.
According to Seyfarth, the annual success rate for employers opposing class certification for wage and hour litigation was up 20 percent last year, to 63 percent. Moreover, recent U.S. Supreme Court rulings have favored employers, perhaps foreshadowing the result in a trio of pending cases dealing with the scope of arbitration and class actions. And as the Trump administration and a Republican-controlled Senate proceed to fill hundreds of federal court vacancies with conservative judges, the odds of labor friendly rulings may diminish further.