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The Economy And Employment Law

Published by on October 15, 2008

A number of commentators have noted in recent weeks the expectation that employment-related lawsuits will increase during the next economic cycle.  Others are focusing attention on managing layoffs, HR tips in a downturn, and laws to think about during the credit crunch.  Some look at the economic downturn from both sides of the employment-law fence […]

A number of commentators have noted in recent weeks the expectation that employment-related lawsuits will increase during the next economic cycle.  Others are focusing attention on managing layoffs, HR tips in a downturn, and laws to think about during the credit crunch.  Some look at the economic downturn from both sides of the employment-law fence (here).  Finally, there is the pending question of how the election will change employment law (here).  Employment law issues will certain garner attention in the coming months given the election and the economic cycle.

We turn back to the question of more employment lawsuits after the break.

The international law firm of Fulbright & Jaworski, LLP, making use of its extensive resources as a large, institutional law firm, has issued a lengthy report on its annual survey of litigation trends.  The summary can be found here.  (Hat tip to the Manpower Employment Law Blawg for pointing out the study.)  They say the following regarding employment cases:

“Workplace Cases on the Rise

24. Wage-and-Hour Pressures – With employment cases perennially taking up the largest portion of corporate dockets, Fulbright sought to learn which types of employment disputes are the most nettlesome, particularly in multi-plaintiff cases and class actions. Respondents report the greatest spike in wage-and-hour suits – in which employees allege underpayment for overtime, meal and rest times. Nineteen percent of U.S. companies cited an increase in wage-and-hour cases in the past year vs. only 1% noting a decrease. Retailers, which frequently call on part-time or seasonal workers, appear to have the most exposure: One-third of retail firms saw an increase in wage-and-hour litigation, with none reporting a drop. In contrast, 6% of U.K. companies saw any upward movement in wage-and-hour disputes.

25. Other Employment Cases – After wage-and-hour, companies saw pronounced increases in five other areas of workplace litigation: General discrimination suits, followed by privacy, ERISA, disability claims, and age discrimination. Retailers and financial services firms saw the sharpest rise in discrimination claims; retailers shared the lead with energy firms in ERISA cases; and retailers led again in cases tied to ADA claims.

26. Money Cases – Of 10 major types of employment litigation, U.S. companies pointed to race discrimination cases as creating the highest financial exposure, followed by claims stemming from sexual discrimination; wage-and-hour violations; ageism; harassment; retaliation; disability; non-compete disputes; and violations of the Family Medical Leave Act.”

(c) Fulbright & Jaworski, LLP

They further report that “More than half of in-house counsel surveyed by Fulbright felt that the pace of new lawsuits will at least remain stable, with 34% expecting an increase in legal disputes into 2009.” 

Only time will tell whether the credit crisis and economic cycle will result in an increase in employment-related litigation.  We anticipate that the biggest factor will be whether the economy can effectively absorb the jobs that are being lost in the financial sector.  Many employment cases spring from the inability of an individual to obtain another job in a tight economy.

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