HR Legalist

U.S. Supreme Court Upholds Class Arbitration Waivers

The U.S. Supreme Court yesterday decided Epic Systems Corp. v. Lewis, 16-285 (May 21, 2018), upholding employment contract provisions that require employees to arbitrate their disputes with the company individually rather than on a class-wide basis. This resolves a split among the circuit courts of appeals, creating certainty and uniformity for employers across the country.

This decision will have a far-reaching effect on employers. Wherever an employer enters into an arbitration agreement with an employee that precludes bringing claims on a class-wide basis, the agreement will serve to fend off class and collective actions, including wage and hour class and collective actions, age discrimination collective actions, and collective actions under the Fair Credit Reporting Act. While the employer will still have to arbitrate the employee’s individual claims, it will be much more difficult for a few disgruntled employees to start a company-wide lawsuit. Where the individual damages are small, this will likely discourage employees from bringing litigation altogether.

That said, employers may still waive these arbitration provisions and allow the employees to bring class claims—something that may be advantageous to employers when the alternative would be piecemeal arbitration of a large number of individual claims.

Employers should make sure that their employees sign well-drafted arbitration agreements that are legally binding. The employment attorneys of Obermayer Rebmann Maxwell & Hippel LLP are able to review existing agreements, draft new ones, and advise on how to implement them across a workforce.

The information contained in this publication should not be construed as legal advice, is not a substitute for legal counsel, and should not be relied on as such. For legal advice or answers to specific questions, please contact one of our attorneys.