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Supreme Court Clarifies Issue Regarding Enforceability of Arbitration Provisions with Class Action Waivers in Employment Agreements

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Supreme Court Clarifies Issue Regarding Enforceability of Arbitration Provisions with Class Action Waivers in Employment Agreements

Separate and apart from the Court’s earlier holding in AT&T Mobility v. Concepcion (2011) that businesses could include arbitration provisions with class action waivers in their consumer contracts, the Supreme Court added to their support for arbitration provisions with class action waivers as part of their recent holding in the cases of Epic Systems Corp. v. Lewis, Ernst & Young LLP v. Morris and National Labor Relations Board v. Murphy Oil, Inc., decided May 21, 2018. The only difference was that these cases dealt with the enforceability of these provisions in employment contracts.


Although the Court’s vote was 5-4, the majority opinion emphasized its support for the use of arbitration as an alternative to court litigation because of its “speed, simplicity and inexpensiveness”. The majority also seemed unmoved by the argument that by upholding class action waivers in arbitration provisions employers would be more inclined to underpay its workers, knowing that the cost of separate individual actions may be a burden that hampers employee’s actions against their employers.


Certainly, this legal clarity should motivate all companies to consider adding an arbitration provision with a class action waiver to their employee contracts and/or employee handbooks to clarify that their agreement to such a dispute resolution process is a condition of their employment. It is estimated that the use of these provisions will dramatically reduce the number of class actions or collective actions being filed in the employment arena and will significantly benefit employers who take advantage of enforcing these provisions.


Although the crux of these cases dealt with whether these arbitration provisions and class actions waivers were enforceable under the National Labor Relations Act, the impact of the decision goes much further, certainly into the world of private employers as well. So as wherefore before employees might collectively challenge a company on its wage and hour practices or discriminatory actions or even the existence of sexual harassment in the workplace, based upon the Supreme Court’s decision even if more than one employee is affected by the same actions, the employee’s only remedy would be individualized action within an arbitration setting. 

| Categories: Legal | Tags: Class Action, Litigation, Employee | View Count: (1953) | Return
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