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).