U.S. Supreme Court Approves Class Action Waivers

Yesterday, by a 5-4 decision along ideological lines, the U.S. Supreme Court held that employment contracts that contain arbitration clauses and class action waivers are enforceable. This ruling was not terribly surprising in light of the makeup of the Court, and it is considered a big win for employers.

What does this ruling mean? It means that employers can enforce written agreements with employees that require the employees to take any claims against the employer to arbitration (rather than into court) and that prohibit employees from bringing their claims as part of a class action.

Arbitration is generally faster and less expensive than court cases. Arbitration decisions are also harder to appeal than court decisions. Many employers would prefer to have employment claims heard by a single arbitrator than by a judge and jury.

The ability to enforce waivers of class action claims is likely to have major impact on employee wage and hour claims. Plaintiffs' attorneys have embraced wage and hour collective actions as a way to get the most "bang for their buck." In those collective actions, the individual members of the collective group often have to do little more than to sign an opt-in form to participate and eventually get a piece of a settlement or judgment. Requiring each individual to go to arbitration on his/her claim is likely to reduce the number of folks who pursue their claims.

Does your company need an arbitration agreement that contains a class action waiver? The attorneys at Wimberly Lawson can tailor one to the needs of your business. You can contact any of our attorneys at (404) 365-0900.