Class Actions for Employment Law

Class actions can be a very useful tool for plaintiffs because they allow for “negative value” lawsuits, or situations in which high individual litigation costs typically deter lawsuits. By forming a group, class actions can decrease an individual’s expenses.

In 2011, the U.S. Supreme Court limited the use of class actions in cases alleging employment discrimination. Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011). Dukes involved a class action of Wal-Mart employees alleging gender discrimination. Id. at 2547. The Supreme Court indicated that judges need to adopt higher standards before allowing a class action. Id. at 2551. The Supreme Court stated that courts should only allow class actions when they involve common questions among all of the plaintiffs. Id. at 2550-52.

The Seventh Circuit followed the Supreme Court’s rational and recently denied a class action in Bolden v. Walsh Constr. Co., 688 F.3d 893 (7th Cir. 2012). Twelve individuals attempted to form a class to sue a defendant company for racial discrimination. Id. at 894-95. The plaintiffs alleged that the defendant company’s local managers discriminated against employees regarding overtime pay and working conditions due to the employees’ race. Id. at 895-96. The district court allowed the individuals to proceed as a class. Id. at 895. However, the Seventh Circuit relied upon Dukes, and denied the class action due to a lack of common issues. Id. at 895-97. It found that the plaintiffs must allege that the local managers committed the exact same conduct and that each plaintiff suffered the exact same injury. Id. at 896. For example, the individual plaintiffs might have received different overtime pay due to their different union status. Id. at 896-97.

The Seventh Circuit re-affirmed the difficulty for class actions in the employment law context. Generally, a class of employees will attempt to allege that there is company-wide discrimination. However, this will likely present several individual questions. One employee might receive lower pay than another due to individual issues regarding work performance, instead of their race, age, or gender. The Seventh Circuit did indicate that it might be possible for a class of employees to contest the actions of a single supervisor. Id. at 899. However, outside of this limited area, courts are unlikely to certify a class action for employment discrimination. Ultimately, this will hurt individual employees by increasing their litigation costs.