Over the last few years, the US Supreme Court has issued a series of landmark decisions addressing class actions, with many commentators predicting the demise of wage and hour class and collective actions as a result. In this special edition of our Wage and Hour Quarterly, we look at how federal and state courts are interpreting and applying these historic decisions and the changes employers should consider making to minimize the risk of class and collective wage and hour claims.
In This Issue:
Do Individualized Damages Really Doom Wage and Hour Class Actions? Lower Courts Apply Dukes and Comcast
The litigation landscape has improved in the wake of the Supreme Court's decisions in Dukes v. Wal-Mart and Comcast v. Behrend. While these decisions undeniably raised the bar for class certification, the various approaches adopted by federal district courts still leave room for class certification where plaintiffs can point to a class-wide policy and present a damages model susceptible to measurement across the class. Read more
Class Action Waivers in Arbitration Agreements Emerge as a Viable Strategy
Federal district court decisions applying the Supreme Court's decisions in Concepcion and Italian Colors make it clear that class action waivers in arbitration agreements are a real option for employers seeking to avoid class-wide litigation. Accordingly, every employer should assess whether the protections afforded by arbitration agreements coupled with class and collective action waivers outweigh the potential disadvantages. Read more
Arbitrators Can Order Class-Wide Arbitration: The Lesson of Oxford Health Plans
While more employers are now considering the use of class action waivers in arbitration agreements, pitfalls remain. In Oxford Health Plans v. Sutter, the Supreme Court unanimously upheld an arbitrator’s decision to allow class-wide arbitration where the parties had delegated the interpretation of their agreement to the arbitrator and their agreement did not expressly preclude class-wide arbitration. Employers using arbitration agreements should review their agreements to ensure they address class-wide arbitration. Read more
The Supreme Court's Genesis Decision Leaves Mooting Strategy Intact
In April 2013, in Genesis Healthcare Corp. v. Symczyk, the Supreme Court considered whether a putative FLSA collective action may proceed when the lone plaintiff’’s claim is mooted by a full offer to pay all the plaintiff is seeking. In a narrowly tailored decision, the Court held that it may not. Significantly, the Court sidestepped the question dividing the Courts of Appeals, namely, whether an unaccepted Rule 68 offer that fully satisfies a plaintiff's individual claim is sufficient to render that claim moot. The Court's decision leaves the divided landscape intact, with mooting an accepted strategy to defeat wage and hour claims in some, but not all, circuits. Employers facing a class or collective wage and hour claim should consider how the appellate and district courts in the relevant jurisdiction are applying Genesis and assess whether mooting the claim is an effective strategy. Read more
Implications for Employers and Actions to Consider
The Supreme Court's recent decisions addressing standards for class and collective actions already have worked a sea change in the wage and hour landscape. In general, courts across the country are adopting higher standards for class certification and more closely scrutinizing class claims to ensure those standards are met. At the same time, employers have more options, including individual arbitration coupled with class and collective action waivers, to avoid class-wide litigation. Based on the current legal landscape, US employers should take the following actions now:
- Decide whether arbitration is a preferred dispute resolution mechanism based on the company's culture and workforce.
- For companies already using arbitration agreements, review those agreements to see if they address class-wide arbitration or waive such rights.
- Consider whether to amend, or introduce, class action waivers in arbitration agreements with existing employees and/or new hires.
Those employers facing class or collective wage and hour claims should evaluate:
- Whether to attack the pleadings early under Dukes and Comcast if there is no alleged unlawful company-wide policy or where individual damages will predominate.
- How the trial courts in that jurisdiction are applying Genesis and whether mooting is a viable and effective strategy.
- If there is an existing arbitration agreement, whether it permits, waives, or is silent as to class claims, and how the courts in that jurisdiction are applying Concepcion, Italian Colors, and Oxford Healthcare.