Employment Arbitration Agreements: Class Action Waivers

Get key takeaways from the U.

S. Supreme Court decision in Epic Systems, and what this means for employers going forward.Many employers require that their employees, as a condition of employment, agree to resolve employment-related disputes through mandatory arbitration. Quite often, those arbitration agreements also contain provisions -- known as class action waivers -- that prohibit the employee from pursuing any such claims on a class, joint, or collective basis. Prior to May 21, 2018, employers faced uncertainty regarding the enforceability of class action waivers in the employment context. Indeed, the U.S. Circuit Courts of Appeal were split on the issue, leaving nationwide employers in the unenviable position of having to determe corporate policy on a jurisdiction-by-jurisdiction basis. That was, however, until the U.S. Supreme Court issued its 2018 decision in Epic Systems Corp. v. Lewis, in which it held that the Federal Arbitration Act mandates the enforcement of class and collective action waivers contained in employment-related arbitration agreements. Having cleared this first hurdle, employers are left to consider open questions including: how to enforce class action waivers when faced with putative class action claims in court; how to draft class action waivers and arbitration agreements designed to reduce the risk of enforceability challenges; and, at a fundamental level, whether to include arbitration agreements and class action waivers in new employment agreements or to enforce waivers in existing agreements.
This content will address the legal, practical, and public policy considerations that all employers must consider in answering these questions. This material will explore the Supreme Court's decision in Epic Systems Corp., and review the history that led to it, as well as other legal principles governing arbitration agreements and class action waivers. The topic will also provide guidance on practical issues facing employers, including how to draft effective and enforceable class action waivers, how to limit the risk of challenges to such waivers, and how to enforce waivers in response to class or collection actions filed in court. Finally, this content will delve into the public policy and practical business considerations that an entity must balance to determine whether to require its employees to agree to individual arbitration in the first place. This topic is essential for individuals attempting to lead their businesses and clients through the developing and often controversial subject of mandatory arbitration agreements and class action waivers contained therein.

Faculty

Robert W. Sparkes, III

K&L Gates LLP

Mark D. Pomfret

K&L Gates LLP