The insurance industry will see an increasing number of American clients involved in employment class action suits according to a legal expert from the global law firm Sedgwick, Detert, Moran & Arnold Llp who says that recent court decisions prove the form of litigation is back in vogue.

At the ?Second Annual Hot Topics seminar for the Bermuda Insurance Market? last week, the firm?s San Francisco partner Jim Brown said that recent decisions showed the judiciary?s willingness to support this form of ?complex, costly employment litigation?. These include a decision by a San Francisco federal district court judge to certify a nation-wide class of approximately 1.5 million current and former employees of Wal-Mart who claim they were the victims of sex discrimination in pay and promotion.

?This is the largest employment class action ever certified in the United States. Judge Jenkins who certified it is considered to be conservative and cautious. Not only does the class which he certified dwarf its predecessors, it may also be the country?s first billion dollar employment class action claim,? Mr. Brown said.

In August this year?s California?s Supreme Court reversed a denial of class certification by a lower court in the Sav-On Drug Stores and urged the ?trial courts to be creative in their efforts to certify employment class actions?.

While class actions are beneficial from a judicial administration perspective because they allow courts to resolve several plaintiffs? claims in one lawsuit, Mr. Brown says that certification ? authorisation by the court to prosecute a lawsuit on behalf of a group of similarly suited people not individually named as parties to the lawsuit ? is a problem because it makes a simple case complicated.

?It takes cases that originally were brought as discreet claims by one employee that had their strengths, that had their weaknesses that could be resolved and you knew the finite risks to cases against the employers where hundreds even thousands of employees are aggregating their claims at the same time,? he said. ?Certification increases the value of a case exponentially, you suddenly have claims that have weaknesses and you have other plaintiffs that have claims that fill the gaps in the weak cases and the old adage there is strength in numbers is certainly true here.?

Mr. Brown says that certification also changes the skills required to analyse and defend the claims.

?You suddenly are faced with cases where there is massive amount of evidence that needs to be managed and handled and gotten through in addition if you are now dealing with statistical evidence which has been in cases before but it?s at the forefront of these cases and finally what we are seeing in the case is that in each we have mentioned before and several others.?

Another issue for employers is that public interest law firms and private law firms are also teaming together and pooling their resources so that they are able to aggressively pursue larger companies and medium sized companies in these claims.

Mr. Brown said wage and hour claims are one area of growth because there is not much money at stake as individual suits and the courts are reluctant to grant attorneys fees that are in excess of what the plaintiff actually recovers in the cases.

Mr. Brown said: ?That type of situation with the court?s increased willingness to certify class actions in the area make them an excellent vehicle to aggregate a lot of the plaintiffs? claims and bring them for a much higher dollar amount.?

Discrimination claims are another area of growth.

?Throughout the 90s the dollar value of individual discrimination claims remained relatively constant. The average was between $100,000-$200,000,? Mr. Brown said. ?Now with the increased willingness to certify class actions, those cases can be consolidated and the dollar amounts can be greatly increased. The plaintiffs are taking the tools that the court has given them in some of these recent decisions and increasing the number of class actions that are filed.?

He told the audience of mostly underwriters and claims experts working in the Island?s re/insurance sector that if they work with US employers it is extremely likely they will become involved with one of these types of cases.

?The reason in wage and hour cases is because the Fair Labour Standards Act, the law that covers all of the wage and hour obligations throughout the United States, effectively covers over 6.5 million businesses, almost 100 million workers are subject to it. It is a complex statute that is easy for employers to screw up on.?

Mr. Brown says that misclassification claims represent the biggest threat in wage and hour class action suits. That is where an employer treats somebody as exempt from overtime rules when they really should be non-exempt.

In a recent case involving Farmers Insurance case, 2,500 members in a class won a $200 million settlement after they were able to convince the court that their jobs duties as claims adjusters did not rise to a level of discretion and independent judgment and that they should have been paid overtime.

Mr. Brown said that employers are disadvantaged in such cases because they don?t keep any records at all of the hours exempt employees work because they don?t need to. The same goes for the working off the clock claim.

Mr. Brown said: ?The problem here again is employee testimony is allowed. They can testify about how much additional time they were working and the employer doesn?t have any records to defend themselves because they haven?t been keeping records because the time was off the clock.?

Discrimination cases are also good fodder for the class action because the statute covers all employers with five employees.

?It is important to note that about 40 percent of the US workforce is female and we?re going to see a lot more of those claims,? he said.

Mr. Brown says employers can steer clear of possible class action suits in these areas by ensuring that the employees are properly classified and that they are paid overtime if they are entitled to it . He says employers should also strictly enforce their policies about working off the clock and conduct gender equity audits to determine whether or not they are at risk for the type of gender discrimination cases that we are seeing.

Mr. Brown says that employers who must defend class actions should secure experienced employment attorneys as well as counsel with class action defence experience.

?This is really important. You are facing some of the top attorneys from the plaintiff?s bar in class actions,? he said. ?You also need counsel with experience in working with statisticians because that is what is going to drive most of these cases and those are going to be the most important issues.?