Employment Class Action Defense Strategies in California

Class Action

California employers have an uphill battle.  The cost of living is high, and employment law is heavily regulated in favor of the employee, leaving employers with an expensive workforce that the law has authorized to self-police employer compliance.  One tool used by employees is the class action lawsuit, in which the employer must defend against the related claims of numerous employees.  Working with an experienced employer defense lawyer as early as possible — even before a complaint is filed — is critical to your employment class action defense.

California Employment Class Action Defense Options

Taking steps to achieve compliance with the California Labor Code and regulations helps thwart many employee class action lawsuits.  However, California employment laws and regulations are complicated.  Compliance requires partnering with a California employer defense lawyer.  If your business is the subject of a class action suit, finding a California attorney experienced in employment class action defense early is crucial.

Successful defense of a California employment class action lawsuit requires consideration of various defense strategies to determine which is best in your case.  Common strategies include these:

  • Fighting class certification.
  • Asserting individual defenses against particular class members or putative class members.
  • Negotiating individual settlements with class members or putative class members.
  • Initiating forced arbitration, where available.

When employers understand the defense options available, they can play a larger role in their own defense and improve their prospects for a positive outcome, one that best matches their goals.

Fighting Class Certification in California Employment Cases

Preventing class certification can be a powerful tool in employment class action defense.  The punch from a class action lies largely in its size — it allows a multitude of plaintiffs to bring suit collectively and, similarly, exposes the employer to liability for a sizeable damages award plus the plaintiffs’ attorneys’ fees.  Failed class certification significantly undercuts the impact of a case if the employee plaintiffs prevail.  An employer that can prevent class certification may be able to significantly reduce its potential exposure.

Defeating class certification requires an understanding of how certification works.  Class certification in California requires the plaintiffs to show all of the following:

  • The existence of an ascertainable class.
  • The existence of a well-defined community of interests shared by the putative class members.
  • The resolution of the claims presented via a class action, as opposed to another dispute resolution method, would substantially benefit the courts and the litigants.

To determine whether a plaintiff has shown a community of interests, the court looks at these factors:

  • The putative class members share a predominant question of fact or law at issue in the case.
  • The putative class representatives’ claims are typical of others’ claims in the class.
  • The putative class representatives can adequately represent the class.

Divided They Fall: Showing Each Putative Class Member Is Unique

Even if all putative class members in a case present common issues of fact or law, their individual experiences may support an employer’s argument that class certification is inappropriate.  In other words, an employer can block certification where it can show that resolving the claims alleged would require the court to analyze each putative class member’s individual experience because the facts vary across class members. 

To defeat class certification, the first step is often to evaluate the claims of the putative class members. Certification will fail if you can show any one of the following:

  • The plaintiffs cannot identify an ascertainable class.
  • The lack of common questions of fact or law among class members.
  • The litigation of the claims through a class action is not feasible or it is less appropriate than other forms of dispute resolution.

Questions like these are best handled by or in conjunction with a California employer defense lawyer experienced in fighting claims against employers and defending against class action employment cases.

One of the purposes of class actions is to streamline litigation, so individualizing class members in this way would make class action inappropriate.  Veteran employment class action defense counsel helps employer clients identify putative class members and advises on how to negotiate individual settlements.

Following Pick Up Stix: Settling Wage and Hour Claims with Individual Class Members

Class action cases present unique challenges to employer defense counsel.  Each case names one or more class representatives to represent the interests of all of the class members or putative class members.  This nature and the sheer size of class action cases can make settlement attempts difficult.

When a class action’s claim involves wage and hour matters, California law imposes limits on the settlement of those claims.  In a win for Golden State employers, the case of Chindarah v. Pick Up Stix, Inc. loosened those limits in some ways, paving the way for employers to settle with individual class members in a class action claiming the employer had misclassified employees as exempt and, as a result, failed to pay overtime.

In Pick Up Stix, the California Court of Appeal, Third Appellate District analyzed the limits imposed by California Labor Code § 1194, which prohibits employer/employee agreements to work for less than minimum wage.  On appeal, the court considered the employer’s settlement agreements with individual putative claim members in a wage claim class action. The court held that the settlement agreements did not run afoul of § 1194 because they did not require the employees to forego any wages the employer conceded were due.  In other words, Pick Up Stix holds that an employer may settle an employee’s wage claim only to the extent the employee is agreeing to forego a claim for disputed wage amounts.

Identifying and negotiating settlement agreements with individual class members or putative class members before the class is certified can be cumbersome and expensive. However, it is also a critical employment class action defense tool that can help reduce exposure and, perhaps, weaken the class action plaintiffs’ case overall.

Force Arbitration: Still an Option?

“Forced arbitration” is the term describing an employee’s agreement to arbitrate employment claims in lieu of suing an employer in court.  The pejorative term comes from the fact that some employers have required employees to sign arbitration agreements as a condition of employment.  However, employers and courts recognize that arbitration can be a helpful and more economical tool in resolving employees’ labor and wage claims. 

An employer named in a class action should identify the putative class members as early as possible to determine whether any are subject to an arbitration agreement.  Any putative class members with arbitration agreements would be disqualified from participation in the class action, thus reducing class size and the employer-defendant’s exposure.

Significantly, in 2019, the California State Legislature enacted Assembly Bill 51 (AB51), which prohibits employers from requiring arbitration agreements as a condition of employment.  The United States District Court for the Eastern District of California has issued a preliminary injunction barring California from enforcing AB51.  However, the injunction applies prospectively only and does not affect employers with employee arbitration agreements executed before the enactment of AB51.

Finding Your Partner for Employment Class Action Defense

Experienced California employer defense lawyers understand the difficult road Golden State employers travel to remain competitive and provide jobs.  The right employer defense attorney for employment class actions is one with deep experience in employment law, sharp litigation skills, and the ability to develop class action defense strategies to prevent claims before they happen and to limit exposure when they do.

Susan A. Rodriguez is that attorney.  The Law Offices of Susan A. Rodriguez, APC, has experience as well as the personnel and financial resources to effectively manage your employment class action defense and serve your other employment law needs.  For more information or a consultation, call Susan at (213) 943-1323 or view her website at caemployerattorney.com.

Posted by Susan A. Rodriguez, Esq.

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