Employment class action lawsuits are a common cause of action in North America, and while we have traditionally seen fewer in Australia, there has been a recent uptick in occurrences. What does this mean for Australian employers? Without large numbers of cases and their precedents to study, how you plan for and prevent class actions may be an ‘unknown’ for many employers. Given the unique bet-the-company issues for employers arising from class actions – we have outlined some risks and strategies.
The Australian context
Whilst uncommon in Australia, there are high-profile examples of employment class action lawsuits.
Indeed, proceedings brought during the 1998 Waterfront Dispute were brought on behalf of approximately 1,400 employees under the Federal Court of Australia’s class action regime. Another example dating back to the days of Australian Workplace Agreements involved proceedings brought on behalf of over 700 academic and general employees of a university.
More recently, two employment class actions have been commenced targeting companies who provide marketing services for large and well-known brands, alleging contravention of minimum labour standards.
Why is the class action landscape changing now?
There are many reasons for the uptick in claims, and those relevant to employment include:
- diminishing union membership across the private sector, but an increase in individual rights and prominence of plaintiff law firms organising class actions
- an increased public awareness of minimum labour standards and broadly applicable laws, such as the general protections provisions, brought into focus as a result of a number of well documented scandals
- an increase in the activity of litigation funders willing to venture outside their traditional stomping ground of commercial litigation.
We also predict that there will be many more such actions in the future, particularly given the ramped up penalties for franchisors and holdings companies found to have been complicit in the underpayment of employees or failure to keep proper employment records by their franchisees and subsidiaries.
Learnings from the US
At Seyfarth, our team of workplace law experts analyse and breakdown the mosaic of US class actions each year compiling a report that highlights the trends. In 2017 they recognised:
- Settlements skyrocket
The monetary value of settlements rose dramatically, with the top 10 settlements in employment-related categories totalling a record high of US $2.72 billion — nearly US $1 billion more than 2016. In Australia, settlements are already causing an increase in insurance premiums for directors.
- A favourable landscape
Evolving case law precedents and new defence approaches resulted in better statistical outcomes for employers in opposing class certification requests for the second straight year. In one of the most active categories, wage & hour litigation, employers won 63% of decertification rulings, a success rate up almost 20% from 2016.
- More enforcement
With the federal government in transition, 2017 results were heavily influenced by Obama administration holdover policies and personnel as government enforcement litigation increased. This balloon is expected to burst in 2018 as the Trump administration settles in further, pulling back these policies and positions; yet, at the same time, it is expected that the private plaintiffs’ class action bar will step up their lawsuit filings and “fill the void”.
- Pivotal rulings
Several key decisions in 2017 of the Supreme Court were arguably more pro-business and pro-employer than in the past. In May 2018 the Supreme Court profoundly changed the class action playing field with its highly anticipated ruling on the Epic Systems, Murphy Oil, and Ernst & Young trilogy of cases which found workplace arbitration agreements with class action waivers were lawful and enforceable.
To access the full report, and additional commentary visit www.workplaceclassactionreport.com.
For a discussion on the ‘best of breed’ strategies in class action and litigation globally – contact one of our partners.
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