The Ruling Made Simple

So, what does this historic ruling really mean? Here’s my take:

• Does it mean the end of all class actions as we know them? Not even close.
• Does it mean the end of all mega-humongous-nationwide-one-size-fits-all class actions? Maybe. Possibly. Potentially. It depends.

The Court stopped far short of condemning all class actions. It also stopped short of prohibiting nationwide class actions such as the one facing Wal-Mart. Instead, the Court ruled that for a nationwide class action to survive it must offer clear evidence of a nationwide policy or practice that actually damaged the class.

The Court found no such policy or practice on Wal-Mart’s part. Like most companies, Wal-Mart’s corporate policy officially forbade discrimination. And, like most companies, managers were given considerable discretion in enforcing the policy and making pay, promotion and other decisions.

The key sentence in the opinion (in my opinion): “In a company of Wal-Mart’s size and geographical scope, it is quite unbelievable that all managers would exercise their discretion in a common way without some common direction,” Justice Scalia wrote. For that reason, a single class action was deemed inappropriate.

What Others Are Saying

Here are some other reactions from around the nation . . .

The New York Times offered up seven different op-ed pieces expressing varying views. In its main article on the ruling (Wal-Mart Case Is a Blow for Big Cases and Their Lawyers), it offered a nice summary of the Court’s reasoning behind the decision. In short, the problem with allowing massive class actions is that plaintiffs don’t have to show real injury but instead get paid based on a formula:

In his opinion, Justice Scalia said it was unacceptable to allow employment discrimination lawsuits to proceed as huge class actions when monetary awards would be based on a broad formula per plaintiff, without having an individual assessment of how much each plaintiff had suffered.

He wrote that to allow that to happen in the Wal-Mart case, the largest employment class action in American history, would have been hugely unfair to Wal-Mart because it might have had to pay out damages without many of the plaintiffs demonstrating how much they were injured.

The Associated Press called the ruling a “blow to class actions” and opined that “mounting a large-scale bias claim against a huge company will be more difficult.

Not surprisingly, business groups (many of which filed briefs in support of Wal-Mart’s position in the case) heartily embraced the decision. “We applaud the Supreme Court for affirming that mega-class actions such as this one are completely inconsistent with federal law,” said Robin Conrad of the U.S. Chamber of Commerce. She added: “Too often the class-action device is twisted and abused to force businesses to choose between settling meritless lawsuits or potentially facing financial ruin.”

Others were decidedly less enthusiastic. Marcia Greenberger of the National Woman’s Law Center said that the ruling “strikes a blow to those who face discrimination in the workplace to be able to join together and hold companies, especially large companies, accountable for the full range of discrimination they may be responsible for.”

Joseph Sellers, the lead lawyer for the plaintiffs in the Wal-Mart case, noted that the decision would likely result in even more class actions at the store/regional level. He predicted the decision would hurt both his clients and Wal-Mart because it “will be splintered into many cases that may take longer and be harder to resolve” based on “checkered” legal standards that vary from jurisdiction to jurisdiction.

Law scholars generally agreed that the ruling will discourage plaintiffs’ lawyers from pursuing large-scale class actions. Columbia University professor John Coffee said the ruling “significantly changes the balance between employers and employees. And it largely eliminates the monetary threat facing big employers.” “Lawsuits are expensive to bring,” he said, “and if there is no money relief at the end of the road, there is no incentive to bring the suit.”

Several bloggers weighed in as well. Daniel Schwartz of The Connecticut Employment Law Blog has a nice summary here. Jon Hyman of the Ohio Employer’s Law Blog has a detailed legal analysis here. And Evil HR Lady has a piece entitled Why the Wal-Mart Ruling Is Good for Women.

The Court’s full opinion is available here.

What Should Employers Do?

Here are some lessons employers should learn from this ruling:

1. Implement company-wide policies and practices prohibiting discrimination.
2. Communicate the policies and practices to all employees on a regular basis.
3. Train managers on proper enforcement of the policies and practices.
4. Promptly and thoroughly investigate any and all complaints.
5. Take appropriate steps to address any violations.
6. Never ever retaliate against any complainant.

Today’s topic: LITIGATION $$$. More specifically: who’s spending what where and why?

Verdicts Up. According to the latest data from Jury Verdict Research, the median award for all types of discrimination claims shot up a whopping 46% in the past year, from $216,575 to $317,032. The mean retaliation verdict also rose substantially — up 51% from $146,050 to $221,250.

What are an employer’s odds of winning at trial? Employers won only 42% of employment lawsuits in the past year. Over the past decade, the lowest win rates were in pregnancy discrimination cases (37%), sex discrimination (38%) and age discrimination (46%). The only type of case in which an employer won greater than 50% of cases was race discrimination (51%).

What are the most common discrimination lawsuits? Sex was #1 (35%), followed by race (25%), disability (15%) and age (13%).

What types of discrimination generate the biggest verdicts? In federal court, disability discrimination was #1, followed by age, sex and race. In state court, age was #1, followed by race, disability and sex.

What employers took the biggest hits? Government entities faced the most claims, followed by manufacturing/industrial, service/retail and then transportation.

Are employers better off in federal or state court? Generally speaking, employers are better off in federal court, where they won 45% of the cases, versus only 40% in state court. Even more siginficant, the median federal award was 45% lower than the median state award.

What about settlements? The median settlement amount was the highest in the past decade at $95,000 — a 5% jump over last year. The biggest settlements were in race cases, followed by sex and disability.

Where can I get more? For the full report — which should be required reading for all HR professionals, business owners and lawyers — click here.

Stay tuned for more.

The Facts

Claims of discrimination against Muslims filed with the EEOC have more than doubled in the past five years. rising to a new high of 1,490 last year from 1,304 in 2008 and only 697 in 2004. Strange as it may seem, there were more claims in each of the past two years than in the year immediately after the 9/11 attacks. Moreover, a recent Pew Research Center poll shows that public perception of Muslims has dropped from a 41% favorability rating in 2005 to just 30% now — a decrease of more than 25%.

“Open Hatred”

“There is a hatred, an open hatred, and a lack of tolerance of people who are Muslim,” says Mary Jo O’Neill of the EEOC. She and others point to the recent oppositions to mosque building and a pastor’s threat to burn the Quaran as merely the tip of the iceberg. “One can easily conclude that since the general situation is so unfavorable when it comes to Muslims that this negative idea is carried into the workplace,” says Shams Inati of the Center for Arab and Islamic Studies at Villanova University.

Recent Suits

Two recent religious discrimination suits are illustrative of the struggles in this area.

In EEOC v. JBS USA, LLC, the EEOC alleges that supervisors and co-workers “threw blood meat, and bones” at Muslim employees and repeatedly made anti-Muslim offensive comments in the workplace. It also claims that JBS refused to accommodate prayer-time requests of Muslim employees and then retaliated against them by firing them when they asked that their break times be changed during the Islamic holy month of Ramadan.

In another high-profile case, a Disney hostess named Imane Boudal alleges that she was sent home when she refused to remove her hijab (a headscarf worn by some Muslim women) at work. “Disney has apparently worked to hide Imane’s hijab, fearful the sight of hijab would adversely impact its guests,” says her lawyer, Ameena Mirza Qazi.

Disney has a different view. “She’s been allowed to work,” says Disney spokesperson Suzi Brown. “We’ve given her the opportunity to work in a backstage role the last several shifts she’s come in.” Brown added: “It has to do with the costume — every role at Disneyland Resort has a specific costume.”

Qazi offered this advice to Disney: “Take a ride on one of your own rides, a little thing called ‘It’s a Small World,’ which celebrates human diversity.” 

What Employers Should Do

As anyone who has attended one of my webinars or presentations knows, it’s my strongly held belief that all of employment law boils down to one little word: LOVE.

Want to avoid lawsuits? Love your employees. All of them. Don’t tolerate harmful, offensive conduct by your employees that targets any protected class — including Muslims.

The EEOC has put together several helpful tools to assist employers in handling religious accommodation and similar issues the right way. Click here for a handy set of answers to FAQs and here for the EEOC’s “best employer practices” guide. I urge you to check ‘em out.

Women now make up the majority of the non-farm workforce and the vast majority of college attendees. Recent studies show that wage disparities appear to be narrowing. In the not-so-distant future, the U.S. will be more than 50% non-white. The Supreme Court and even the Oval Office reflect more diversity than ever before. So, when will Title VII be repealed?

Here’s how our audience of 2,000+ responded . . .

a.  By the end of the week (0%)
b.  By the end of the decade (15%)
c.  By 2030 (10%)
d.  By 2050 (4%)
e.  Never (71%)

So, the vast majority of you feel that Title VII will never be repealed. I tend to agree.

Setting aside some of the obvious political reasons (not a whole lot of politicians are likely to want to raise their hand and say “I’m against discrimination laws”), there’s still quite a bit of work to do before true equity will rein in the workplace.

Among other things, women still only earn 77¢ for every $1 earned by men — a whopping $431,000 less over the length of an average career. Despite the fact that women now constitute a majority of the workforce, only 3% of CEOs and 13% of executive officers are women. There are other similarly sobering statistics for other protected classes.

The Bottom Line: Don’t expect Title VII to go away any time soon.

As always, thanks for your participation!

(Sources: Bureau of Labor Statistics, Catalyst, TIME Magazine, Center for American Progress)