{"id":3477,"date":"2018-05-21T16:56:46","date_gmt":"2018-05-21T20:56:46","guid":{"rendered":"http:\/\/employerdefensereport.com\/?p=3477"},"modified":"2026-03-18T14:47:39","modified_gmt":"2026-03-18T18:47:39","slug":"scotus-approves-class-action-waivers-in-employment-arbitration-agreements","status":"publish","type":"post","link":"https:\/\/www.connmaciel.com\/employer-defense-report\/scotus-approves-class-action-waivers-in-employment-arbitration-agreements\/","title":{"rendered":"SCOTUS Approves Class Action Waivers in Employment Arbitration Agreements"},"content":{"rendered":"

By:\u00a0 Kara Maciel and Dan Deacon<\/p>\n

The U.S. Supreme Court ruled<\/a> on Monday that class\/collective action waiver clauses in employment agreements that compel employees to settle disputes individually with a third-party arbitrator are enforceable.\u00a0 In a landmark 5-4 ruling, the Justices in the majority rejected the National Labor Relations Board\u2019s position and held that a class\/collective action waiver in an arbitration agreement \u2013 which effectively prohibit employees from joining together in a class or collective action lawsuit to settle disputes \u2013 do not violate the Federal Arbitration Act (\u201cFAA\u201d) or the National Labor Relations Act (\u201cNLRA\u201d).<\/p>\n

Background <\/strong><\/p>\n

Arbitration agreements \u2013 requiring employees to submit claims to an arbitrator instead of filing in court \u2013 are relatively common in the workplace.\u00a0 Many employers favor arbitration because it tends to lower the cost of litigation and streamlines a resolution.<\/p>\n

The legal issue that percolated through the federal Courts of Appeals over the past several years was whether a class\/collective action waiver in an arbitration agreement is enforceable.\u00a0 An arbitration agreement that includes a class\/collective action waiver benefits an employer because it prevents employees from banning together to file costly class or collective actions and it forces employees to utilize the arbitration process rather than filing a lawsuit.\u00a0 Thus, the only form of redress for an employee is a single action that must be worked out before a neutral, third-party arbitrator.<\/p>\n

Over the past five years, the Courts of Appeals issued conflicting opinions on whether class action waivers are enforceable.\u00a0\u00a0 Notably, between 2013 and 2014, employers were provided favorable opinions from the U.S. Courts of Appeals for the Fifth, Second, and Eleventh Circuit which concluded that the NLRA does not invalidate class action waivers in arbitration agreements.\u00a0 In contrast, in 2016, the U.S. Courts of Appeals for the Ninth and Seventh Circuit adopted the NLRB\u2019s position that class and collective action waivers violate Section 7 of the NLRA.<\/p>\n

The Supreme Court\u2019s Decision<\/strong><\/p>\n

The Supreme Court\u2019s ruling brings finality to an issue that sparked years of debate and caused significant uncertainty for employers.\u00a0 Oral arguments took place in October 2017 with the justices appearing split along ideological lines – except for Justices Clarence Thomas and Neil Gorsuch who did not speak at all during the session.\u00a0 Interestingly, however, it was Justice Gorsuch who wrote the opinion \u2013 which was his first major opinion since joining the Court last spring.<\/p>\n

As alluded to in our prior blog post<\/a>, President Trump\u2019s ability to fill Justice Scalia\u2019s vacancy was ultimately a deciding factor in what appears to have been a partisan showdown.\u00a0 Speaking for the conservative wing on the bench, Justice Gorsuch explained that the law is clear that Congress in enacting the FAA instructed federal courts to enforce arbitration as written, including those terms calling for individualized proceedings, and that the \u201cdecision does nothing to override\u201d what Congress has done.\u00a0 In a lengthy dissent, Justice Ginsburg criticized the majority for overturning 80 years of NLRB precedent.\u00a0 Justice Ginsburg commented that the majority\u2019s decision is \u201cegregiously wrong\u201d and expressed concerns that many employees with small claims, such as minimum wage and overtime violations, will be disinclined to pursue potential claims individually.<\/p>\n

The expected fall-out and the future of this ruling now rests with Congress.\u00a0 Congress certainly has the ability to revise the FAA and the NLRA through legislation. \u00a0Given the deep split amongst party lines, however, it is unlikely that Congress will act any time soon.<\/p>\n

Take Aways for Employers\u00a0<\/strong><\/p>\n

In light of the Court\u2019s decision, employers should immediately review their practices and policies governing employment agreements with arbitration clauses.\u00a0 For those employers who do not require arbitration of disputes, now may be the time to reconsider whether to implement such an agreement with current employees.\u00a0 For those employers who have arbitration agreements in place already, now is the time to ensure the agreement contains an enforceable class\/collective action waiver, especially for wage and hour disputes.\u00a0 Employers may want to evaluate whether to restrict class\/collection actions for other types of disputes, such as discrimination or harassment cases.\u00a0 Importantly, any arbitration agreement must be drafted with the company culture in mind.<\/p>\n

In short, employers now have the ability to utilize a new forum to resolve legal disputes on an individual basis.\u00a0 In some circumstances, especially for class\/collection claims, an arbitration may be less expensive than lawsuits, take less time, and do not typically result in years of appeals.\u00a0 Ultimately, the Supreme Court\u2019s decision is welcome news for employers.\u00a0 Employers can proactively mitigate litigation risk through carefully drafted employment agreements and more effectively manage legal disputes.<\/p>\n","protected":false},"excerpt":{"rendered":"

By:\u00a0 Kara Maciel and Dan Deacon The U.S. Supreme Court ruled on Monday that class\/collective action waiver clauses in employment agreements that compel employees to settle disputes individually with a third-party arbitrator are enforceable.\u00a0 In a landmark…<\/p>\n","protected":false},"author":21,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_price":"","_stock":"","_tribe_ticket_header":"","_tribe_default_ticket_provider":"","_tribe_ticket_capacity":"","_ticket_start_date":"","_ticket_end_date":"","_tribe_ticket_show_description":"","_tribe_ticket_show_not_going":false,"_tribe_ticket_use_global_stock":"","_tribe_ticket_global_stock_level":"","_global_stock_mode":"","_global_stock_cap":"","_tribe_rsvp_for_event":"","_tribe_ticket_going_count":"","_tribe_ticket_not_going_count":"","_tribe_tickets_list":"[]","_tribe_ticket_has_attendee_info_fields":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[815],"tags":[851,910],"class_list":["post-3477","post","type-post","status-publish","format-standard","hentry","category-discrimination-harassment-retaliation","tag-class-action-defense","tag-labor-union-activity"],"acf":[],"yoast_head":"\nSCOTUS Approves Class Action Waivers in Employment Arbitration Agreements - 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