April 23, 2015 Articles

The Economic Realities of Employment Class Actions

An uncensored look for employees and employers alike.

By Lisa Sherman – April 23, 2015

Employment class actions receive significant attention because of the shockingly large recoveries reported in the news and the ever-changing standards applied by state and federal courts, as well as the highest court in the land, the U.S. Supreme Court, which leaves employers of all sizes nationwide in a constant state of panic.

As a former in-house corporate counsel, I will let you in on a well-kept secret among my colleagues who are responsible for minimizing their company’s exposure and controlling costs. We fear employment class actions and multi-plaintiff lawsuits the way Californians fear the “big one,” i.e., earthquake. In whispered tones, we remind our superiors ad nauseam that we must prepare for the “big one,” which is always reflected in our annual legal budgets.

Little has been written on the economic realities of employment class actions for individual employee class members, who must consider whether it is economically worth pursuing or joining. Likewise, employers, large and small alike, are faced with complying with standards that continually change, exorbitant defense costs before even reaching the merits, and total potential liability that alone can bankrupt any size company. Through my own experiences and those my colleagues have shared with me regarding their experiences, as well as the most recent research available on this topic, this article provides an uncensored look at the economic realities of employment class actions for employees and employers alike.

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