Rise of Class-Action Lawsuits in Employment Law

The explosion of new legislation across the U.S. related to employee rights has had another effect — a rise of class-action lawsuits in employment law.

Carlton Fields, a Florida-based law firm, recently released its 2023 class-action survey. It’s an in-depth look at the issues and practices related to class action matters and management, including annual publication reports on historical trends and information related to emerging topics in class action litigation.

From the firm:

The 2023 Carlton Fields Class Action Survey is based on interviews with general counsel or senior legal officers at more than 400 Fortune 1000 and other large companies across a variety of industries. They shared their thoughts about class action exposure and best practices for class action management.

Below, we examine some of the major takeaways from the survey, which reports that class-action spending has gone up for eight straight years.

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Rise of Class-Action Lawsuits in Employment Law

The survey from Carlton Fields spans a number of topics, from company spending and budgets to predictions about what lies ahead. Here are some of the highlights.

Labor and Employment Takes Big Share of Budgets and Time

To start, companies said labor and employment litigation accounts for approximately 35 percent of class action spending and 34 percent of issues headed up by in-house legal departments.

Employment class-action suits also dominated the few remaining COVID-19 pandemic class actions, at 50 percent.

Spending on Class Actions Increases for the Eighth Straight Year

As mentioned above, spending on class-action suits continues to grow.

And corporate legal spending to defend these lawsuits is expected to increase 6.8 percent in 2023, one of the highest growth rates in legal spending, according to Carlton Fields.

Meanwhile, spending on class actions grew 8 percent in 2022, an increase that trails only 2021 since the firm began conducting the survey in 2011.

Companies report that increased spending on class actions has two major culprits:

• Claims are getting larger
• More companies are facing class-action lawsuits

Labor and Employment, Part II

Labor and employment led both in number of class actions (33.6 percent) and in share of overall class action budgets (34.8 percent) — and by a wide margin, Carlton Fields reports.

It’s up from the 2022 survey, when the companies that were surveyed reported that labor and employment was 23.5 percent of the average class action budget.

Labor and employment spending now exceeds the percentage of matters, which was typically seen for higher-risk subjects, i.e., antitrust and securities. Consumer fraud is the second largest area of class action spending.

Taken together, labor and employment and consumer fraud account for 55.8 percent of class action spending.

Growth of Labor and Employment Class Actions

As a share of overall class action matters, labor and employment class actions rose substantially in 2022.

The reason? Companies say both regulatory agencies and employees are being more aggressive than in years past, according to the survey. When that happens, of course, it can lead to more lawsuits.

Also, consumer fraud class actions also increased due to claims resulting from the use of:

• Social media
• Product labeling
• Debt collection

Lastly, COVID-19 class action matters are nearly gone, dipping below 10 percent last year, though most of the remaining pandemic class actions do revolve around labor and employment matters.

General Employment Law Compliance Resources

Managing Employment Law Compliance

While we focus on just a few of the items from the 42-page survey here, the numbers do provide some insights into the state of employment law today.

The rise of employment law legislation in recent years appears to have led to more litigation.

More than 110 jurisdictions now have their own minimum wage law. Dozens of states, counties and cities have enacted paid leave legislation. And all these laws add up to new labor law posters, which saw a jump from 516 updates in 2021 to more than 650 in 2022.

Generally, companies don’t set out to violate employment laws. But the increased compliance requirements over the past few years can lead to misapplication of these statutes and the potential for litigation.

Conclusion

It certainly appears that class-action lawsuits related to labor and employment are on the rise.

Employers should take this information as a sign to ensure compliance with the latest laws.

Find the full 2023 Carlton Fields Class Action Survey on the firm’s website.

This Employment Law News blog is intended for market awareness only, it is not to be used for legal advice or counsel.