Earlier this year, a Court in San Francisco certified a class action lawsuit against Wal-Mart on behalf of some 2 million former and current employees alleging discrimination in promotions and unpaid wages. The claim is that Wal-mart discriminated against women by creating a culture of a men’s club in which male managers promoted other male managers, even though the vast majority of employees are female. Here’s the decision, for those with time on their hands. That decision is now headed to the U.S. Supreme Court, as this Toronto Star article reports.
Wal-Mart, and some of the biggest companies in the world, have been busy lobbying politicians and the Supreme Court to overrule the Wal-Mart decision from the lower court, and to more generally stop allowing class actions in employment cases. The lower court judge acknowledged that the case will be difficult since it involves over a million complainants, but ruled that “rough justice is better than the alternative of having no remedy at all for any class member.”
Wal-Mart argues that it is unfair that it has to deal with these cases in one lawsuit. It argued that it should have a chance to defend against the allegations on a case-by- case basis. That is code for saying that Wal-mart doesn’t want to have to defend any cases, since it knows that without a class action, individual employees will not have the information and resources to take on Wal-Mart on their own.
As in Canada, in order to go forward with a class action lawsuit, you need to first get the case certified (approved) by a court to treat a bunch of otherwise individual lawsuits by employees as one large lawsuit on behalf of all of the employees. The Court considers whether the many individual cases raise common legal and factual issues. There has also been some high profile class actions brought in Canada alleging systemic violations of employment standards laws. The class action against Scotiabank was certified by a lower court last February, and the appeal of that decision was heard last week before the Ontario Divisional Court. A similar case against the CIBC was dismissed last year by the same court that certified the Scotiabank action. So we can expect the Divisional Court (and probably later on the Ontario Court of Appeal) to clarify how class actions in employment cases will be dealt with in Ontario.
Unions are very good at ensuring compliance with employment regulation for their members. However, since Wal-Marts and banks are virtually impossible for unions to organize, due to employer resistance and a legal model ill-suited for organizing service sector employers like these, bank and retail workers are mostly not protected by unions. We know from studies that employment standards legislation has very poor compliance levels in nonunuion workplaces. Harry Arthurs found in Fairness at Work that 75% of federal sector employers (including banks) are in non-compliance with the Canada Labour Code, for example. Governments lack the ability, willingness, or resources to properly enforce this legislation. Therefore, class actions are a good solution to the problem of systemic non-compliance with employment legislation. They overcome the access to justice issue that plagues complaint-based models. Individual employees lack the knowledge and resources to pursue their huge employers to recover their legal entitlements. With the class action format, skilled and knowledgeable lawyers can represent the workers for a relatively small share of each workers’ potential recovered damages, and we know that the employers will have top legal representation too. So that class action is a fairer fight, more likely to be assessed based on the legal merits.
Rather than restrict access to class actions in employment cases, my view is that governments and courts should be expanding this tool to make it easier to use in the future. It is an effective form of private enforcement of government laws. A real threat of a class action will be just the sort of risk needed to provoke employers to pay close attention to their employment law obligations. The message to the banks and wal-marts of the world who argue that class actions are somehow “unfair” is simply this: Ensure systems are in place that guarantee compliance with the laws, and you won’t have a problem. Is that too much to expect of huge, sophisticated employers?
What are the arguments against allowing class actions for systemic non-compliance with employment regulation?