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United States Supreme Court Rules in Favor of Employers Regarding Class Action Arbitration

Striking a major blow to employees, in a 5-4 ruling (along party lines which shows the importance of Trump appointee Gorsuch), the United States Supreme Court has ruled that employers can require employees to waive their right to class action lawsuits and may instead force employees to arbitrate their claims individually. This is particularly important in the wage and hour context, where employers who are alleged to have failed to pay proper wages often find themselves facing class-action suits, where many employees, each owed a small amount of money, join together to form one large and potentially very expensive wage and hour action. If, as the United States Supreme Court has just ruled, individuals can be prevented from joining together and can be required to bring such claims individually through arbitration, the number of individuals willing to go through the judicial process alone, without the company and strength of a “class” may decrease dramatically. Moreover, the plaintiff’s bar may think twice about bringing an individual action as the fee potential will dramatically lower.

As a result of this ruling, all employers should immediately consider whether to require employees to sign some form of an arbitration agreement. Of course, employers must be mindful of the fact that arbitration does have its disadvantages, such as the costs involved and the wage and hour experience of the arbitrator assigned that ultimately adjudicates the matter (as opposed to seasoned federal court judges).

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About this Author

Jay S. Becker, Giordano Law Firm, Labor Employment Attorney
Shareholder

Mr. Becker, Chair of the Labor and Employment Practice Area, devotes his practice to labor relations and employment law and litigation on behalf of management. His experience includes conducting trials, hearings, arbitration and mediation sessions; responding to state and federal administrative agency charges; collective bargaining; drafting employment-related corporate documents such as restrictive covenants, employee handbooks, employment agreements, various stock and compensation plans, and separation/severance agreements. He counsels employers on all employee relations issues including...

732-741-3900
Jeri L. Abrams, Giordano Halleran,  Employment Documentation Lawyer, Workplace Litigation Attorney
Shareholder

Jeri focuses primarily on employment law, with an emphasis on drafting and negotiating complex employment-related documentation, such as executive employment, consulting, restrictive covenant, commission, bonus, retention, change-in-control and severance agreements. Jeri counsels employers on a broad range of employment matters, including hiring, disciplining and terminating employees, family and medical leaves, disability leaves and accommodations, anti-discrimination and anti-retaliation laws, wage and hour compliance, and reductions in workforce. She works closely with management, in-house counsel, and human resources personnel in the development and implementation of employment policies and handbooks that comply with applicable law and are consistent with the employer's unique practices and organizational culture. Jeri also advises clients on the employment aspects of M&A deals and other corporate transactions.

Representative Matters 

  • Fortune 300 Company: Represented client in 4 separate recent acquisitions; drafted and negotiated complex executive employment agreements between the client and the founder of the acquired businesses, each of whom were integral to the value of the business being purchased.
  • Publicly-held Pharmaceutical Company: Represented client during a major workforce reorganization, which included 2 plant closures, staff relocations and a series of 9 reductions in workforce; worked closely with the client's legal and human resources departments to ensure the orderly separation of more than 600 employees and to minimize associated legal risks and business disruption; provided advice related to federal and state WARN act issues, wage and hour laws, OWBPA requirements and severance arrangements; prepared and negotiated severance agreements.
  • Publicly-held REIT: Advised client on a wide-array of unique employment matters in the context of the "spin-off" of one of its divisions.
  • Private Equity Firm: Represented large private equity client in connection with a high risk and sensitive termination of the CEO of one of its portfolio companies.
  • Private Equity Firm: Represented private equity firm in the drafting and negotiation of employment agreements for the senior executives of a large portfolio company.
732-741-3900
Ari G. Burd, Giordano Law Firm, Labor Employment Attorney
Associate

Mr. Burd practices in both the Labor and Employment Law Practice Area and the Health Care Practice Area. In the Labor and Employment Practice Area, Mr. Burd devotes his time to litigation and counseling employers with regard to traditional employment and labor related issues. Mr. Burd has extensive experience in both the state and federal courts in areas including retaliation, wrongful termination, wage and hour, sexual harassment and race, age, gender and disability discrimination. Mr. Burd also has considerable experience in assisting negotiating and drafting employment related...

732-741-3900