Employment class actions: FLSA, data breaches lead filings

Claims under the Fair Labor Standards Act (FLSA) continue to lead class action filings in 2023, while actions for data breaches and privacy violations have surged, according to a recent report on class action lawsuits.

The Class Action Review 2024, published by Duane Morris LLP, analyzes class action trends, decisions and settlements. The report provides insights to organizations and corporate counsel on what they can expect in 2024, in terms of class action filings and court decisions on class action qualification requirements, based on the trends identified from 2023 data. Class actions and government enforcement lawsuits generated more than $50 billion in settlements in 2023, according to the report.

“Looking at the class action settlement numbers from the past year, it’s clear that last year’s unprecedented level of settlements was not a one-off phenomenon,” said Duane Morris partner Gerald L. Maatman, Jr., co-author of the review and chair of the firm’s workplace class action division. “We have entered a period of increased threats and heightened stakes in the valuation of class actions. The massive numbers will only work to further motivate the plaintiffs’ bar in 2024 to increase filings and assert even more aggressive settlement positions.”

Employers and HR professionals may take particular interest in the following key findings:

• Courts issued more rulings in FLSA collective actions than in any other areas of law. In 2023, courts considered more motions for certification in FLSA matters than in any other substantive area, with a success rate of 75 percent.
• Data breach class actions continued their growth, but with inconsistent outcomes. Class action cases for data breaches more than doubled from 604 cases in 2022 to 1320 in 2023. The shift to remote work, rise of cloud-based storage, and the escalation of sophisticated cybercriminal activity has threatened data security like never before, the report states, giving rise to more large-scale data breaches across industries and thereby prompting more lawsuits. But less than 25 percent of the class certification decisions issued in 2023 data breach cases came out in favor of plaintiffs.
• Privacy class actions gained momentum, increasing in number and sophistication. Class action litigation in the privacy space continues to be the hottest area of growth in terms of activity by the plaintiffs’ class action bar, the report finds. In the employment arena, this trend is exemplified by claims under the Illinois Biometric Privacy Act (BIPA), which more than doubled in 2023 after two Illinois Supreme Court ruling that significantly increased the opportunity for recovering damages. “BIPA’s technical requirements, coupled with stiff statutory penalties and fee-shifting, provide a recipe for increased filings and hefty settlement demands from the plaintiffs’ class action bar,” explains Maatman.

The report also notes a resurgence of government enforcement lawsuits, particularly by the Equal Employment Opportunity Commission and the US Department of Labor.

“Combined with the growing threat of the rise of privacy and data breach class actions, the resurgence of government enforcement lawsuits, the continued high rate of class certifications and the rise of AI as an aid to the plaintiffs’ bar in handling an even greater volume of cases, corporations are well served to take the compliance and risk mitigation steps necessary to protect themselves from this growing danger,” advised Jennifer A. Riley, Duane Morris partner and co-author of the review.