As the global economy spirals into a recession and employee layoffs become more commonplace, business executives, human resources professionals and risk managers face significant challenges going into 2009. When you factor in the potential impact of a new worker-friendly administration, and with employee confidence in the job market at an all-time low, the big question is whether we are facing a legal tsunami.

Reductions-in-force make the headlines on a daily basis, and are apt to continue, leaving employees who lose their jobs fearing for their financial security. What's more, those who are unable to land with another employer often choose to sue.

In a tight job market damages in such lawsuits rise, as employers are unable to argue that the awards should be off-set by interim earnings at subsequent jobs. All these factors together are creating ripe conditions for an increase in employment-related litigation.

Risk management necessitates that employers batten down the hatches for the foreseeable future to avoid exacerbating their workplace exposures to litigation.

As if all this were not enough, the election of 2008 portends to be a watershed moment in terms of potential changes to the landscape of labor and employment law for corporate America. Several foreseeable legislative developments after Inauguration Day will impact labor and employment law in a profound manner.

Equally as important, the gatekeepers of those laws, which is the executive branch of the government–including administrative agencies that interpret, adjudicate and enforce the laws, as well as the expected changes within the civil justice system and the federal judiciary–will influence both risk management and defense strategies against liability exposures under new and existing labor and employment laws.

For example, the new year will usher in the Americans With Disabilities Act Amendments Act of 2008, taking effect Jan. 1, 2009. It changes the goal posts on the playing field for ADA litigation and makes the statute more decidedly pro-plaintiff.

In fact, many believe the statute's acronym–ADAAA–should instead stand for “Assume (the employee has a) Disability (and) Ask About Accommodating (it).”

The Obama administration also is expected to advance and expand numerous pro-worker legislative proposals. Many believe the Democratic-controlled Congress will pass several of these pieces of legislation in the first 100 days of Mr. Obama's presidency.

These include:

o The Equal Remedies Act, which would abrogate the statutory caps on liability for compensatory and punitive damages under Title VII and the ADA.

This proposal would change employment discrimination litigation dramatically, as every case would become a “let's roll the dice for a big award” claim. Plaintiffs' trial lawyers will increase settlement value expectations, and seven-figure verdicts most likely will become more prevalent.

o The Employee Free Choice Act is likely to be one of the first bills signed into law in the new administration.

The EFCA will eliminate an employee's ability to vote on a union through a secret ballot, require unions and employers to binding arbitration if they cannot reach a collective bargaining agreement in a timely manner, and triple penalties on employers engaging in unfair labor practices.

o Expect expansion of protections to be pushed by the Obama administration for workers and more obligations to be imposed on employers under the Family Medical & Leave Act, as well as augmentation of whistleblower protections under the Sarbanes-Oxley Act.

o A series of paycheck fairness laws–the Ledbetter Fair Pay Act, the Paycheck Fairness Act and the Fair Pay Act–will negatively impact employer liability.

The Ledbetter legislation amends the statue of limitations for pay discrimination claims to make it easier for workers to assert lawsuits. This will negate the Supreme Court's ruling in 2007 in Ledbetter v. Goodyear Tire & Rubber Co., in which the court said a Title VII pay discrimination claim must be filed within 300 days from the alleged discriminatory pay decision.

The ruling also said that pay set originally at the time of hiring, which is perpetuated over time in terms of lower pay, cannot be challenged in a lawsuit.

Liability will also be expanded under the Equal Pay Act to allow for compensatory and punitive damages, and to narrow an employer's defenses to such claims.

o The Employee Non-Discrimination Act, which would amend Title VII to add sexual orientation as a protected class.

o The Arbitration Fairness Act, which would amend the Federal Arbitration Act by invalidating most workplace arbitration programs that require employees to arbitrate rather than litigate their employment discrimination claims in court before juries.

o The Employee Misclassification Prevention Act, which would amend the Fair Labor Standards Act to increase penalties and enforcement against employers that allegedly misclassify employees as independent contractors.

Meanwhile, President-Elect Barack Obama will have the opportunity to appoint a significant number of federal judges in the coming years. While generalizations are difficult, these new judges are expected to be more inclined to:

o Expand the rights of employees in the workplace.

o Render more lenient interpretations of existing law and proposed legislation.

o Interpret worker rights under the U.S. Constitution in a more liberal and progressive fashion.

The president-elect's own words on the campaign trail underscore his intention to appoint judges who will engender pro-employee decisions. During the final presidential debate, he pledged to appoint judges who are more understanding of employee concerns.

Key administrative agencies that will enforce the new administration's employment law agenda–the Equal Employment Opportunity Commission, the Department of Labor and the National Labor Relations Board–will be emboldened to pursue more progressive investigations against employers for wage-and-hour violations (see related story on page 12), unfair labor practice charges, and claims of unlawful employment discrimination.

Each of these agencies operate as miniature versions of the tripartite federal government, with the authority to “legislate” (by issuing regulations), “adjudicate” (through administrative hearings) and “prosecute” (through agency enforcement litigation).

While each of these agencies are staffed with career investigators and attorneys, the new political appointments in the next administration to lead these agencies are certain to shape a decidedly pro-employee agenda.

Special Reports /

Workplace Litigation To Heat Up As Economic Meltdown Intensifies

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