Class actions exploded in ’08, employers continue to pay the price

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in Discrimination and Harassment,Employee Benefits Program,Employment Law,Human Resources

Employment law class-action litigation is growing at an explosive rate, and the economic meltdown will probably fuel even more lawsuits in 2009. So says a recent report that also predicts far greater financial exposure for employers that must defend their employment policies in court.

The report, compiled by the law firm Seyfarth Shaw, analyzes the foremost workplace-related class-action decisions heard in federal and state courts in 2008.

The firm says five trends make this one of the most challenging employment-law eras ever:

1. The ongoing financial meltdown fueled more class-action litigation in 2008. As record layoffs continued, displaced workers filed more age discrimination and Worker Adjustment and Retraining Notification Act lawsuits.

2. Job displacements caused by the troubled economy brought further exposure to workplace litigation for employers. Employee Retirement Income Security Act (ERISA) class-action filings were up, as former employees sought to recover 401(k) losses.

3. Wage-and-hour litigation continues to increase exponentially. Federal class actions brought under the Fair Labor Standards Act (FLSA) outnumbered all other types of private class actions in employment-related cases. Particularly hard hit: Employers in California, Florida, Illinois, New Jersey, New York, Massachusetts, Pennsylvania and Texas.

4. The Class Action Fairness Act of 2005 continued to have significant effects on workplace litigation, primarily wage-and-hour class actions filed in state court.

5. The financial stakes have never been higher. Employees’ lawyers continue to push the envelope, coming up with new ways to expand the size of classes and the dollar amount of awards. The result: A series of massive settlements in nationwide class actions, especially in wage-and-hour cases and ERISA class actions.

How high is the price tag?

  • For employment discrimination class cases, the monetary value of the top 10 settlements paid in 2008 totaled $118.36 million
  • The top 10 wage-and-hour class-action settlements totaled $252.7 million
  • For ERISA class actions, the top 10 settlements paid $17.7 billion—up from just $1.81 billion in 2007

To request a copy of the 665-page report on CD-ROM, visit www.seyfarth.com/ClassActionReport or e-mail ClassActionReport@seyfarth.com.

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