On Monday, in a 5-4 majority decision in Epic Systems Corp. v. Lewis, No. 16-285, the U.S. Supreme Court found class action waivers in arbitration agreements to be valid and enforceable, settling a long-standing split among federal courts of appeals.

By way of background, the Supreme Court years ago allowed employers to use arbitration clauses as a way to resolve employment disputes outside of court by requiring employees to agree to arbitration as a condition of employment. In recent years, employers have included class action waivers in such arbitration agreements.  These waivers prevent employees from joining a class or collective action lawsuit/arbitration against their employer. 

Prior to the Supreme Court’s decision, federal courts of appeals were divided on the legality of such class action waivers. Though the Federal Arbitration Act (FAA) deems arbitration agreements enforceable as written, in 2013 the National Labor Relations Board (NLRB) ruled that class action waivers in employment arbitration agreements violated the National Labor Relations Act (NLRA).  The NLRA prohibits infringement of employees’ rights to engage in “concerted activity” for a common cause.  Until relatively recently, the NLRA was not considered to affect processes like class actions, arbitration or litigation.

As previously discussed, over the years the Department of Justice and courts of appeal have grappled with the validity of class action waivers in arbitration agreements.  A majority of courts, including the Second Circuit Court of Appeals, have upheld class action waivers, determining that they did not violate the NLRA.

For employers in New York, Connecticut, and Vermont, the Supreme Court’s decision affirms the existing Second Circuit precedent. For employers with operations in jurisdictions across the country, the Supreme Court has provided a measure of clarity, ensuring that class action waivers are legal and can be enforced.

Moving forward, the number of arbitration agreements including class action waivers will increase substantially and will have a profound effect on wage and hour claims, which are typically asserted through class and/or collective action lawsuits.  Employers should consider including class action waivers in their arbitration agreements.  Absent legislation to the contrary, class action waivers are here to stay and employers should consult with their counsel to implement arbitration agreements with class action waivers.

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Photo of Salvatore G. Gangemi Salvatore G. Gangemi

Salvatore G. Gangemi is a Partner in the Litigation Department of Murtha Cullina and a member of the Labor and Employment Practice Group. He advises clients with respect to state, federal and local employment laws. In addition, he litigates matters involving misappropriation of trade secrets, restrictive covenants, breach of employment contract, fiduciary duty, and other work-related common law claims. Sal also counsels clients on day-to-day issues involving workplace management and administration, including requests for reasonable accommodation for disabilities, for family and medical leave, and wage and hour issues.  He conducts employment law training on a variety of topics, including sexual harassment prevention and wage/ hour compliance.  He also drafts employment policies and agreements, and assists clients in auditing worker classification practices and policies both in the context of the Fair Labor Standards Act and state laws governing independent contractor determinations.

Photo of Madiha M. Malik Madiha M. Malik

Madiha Malik is an Associate in the firm’s Litigation Department.  She represents a wide range of clients on issues related to labor and employment law.

Madiha has represented clients including health care facilities, independent schools, and various public and private employers. She has experience defending clients against claims of employment discrimination, harassment, retaliation, reasonable accommodation, family and medical leave issues, and wage and hour violations, under state and federal laws.  Madiha represents clients before federal and state courts and administrative bodies including the Connecticut Commission on Human Rights and Opportunities and U.S. Equal Employment Opportunity Commission.  In addition, Madiha regularly provides training seminars for a wide variety of clients on topics including harassment prevention in the workplace and workplace investigations.

Madiha earned her B.A. from the George Washington University where she received degrees in Journalism and International Affairs.  Before attending law school, Madiha worked for a financial services law firm in Washington, D.C.  Madiha earned her J.D. from the University of Connecticut School of Law.  During law school, Madiha served as a Law Clerk at the U.S. Department of Justice Federal Tort Claims Act Section and held an externship at the United States Attorney’s Office for the District of Connecticut in the Civil Division.

Madiha was an Editor for the Connecticut Law Review and authored a published Note titled, “The Legal Void of Unpaid Internships: Navigating the Legality of Internships in the Face of Conflicting Tests Interpreting the FLSA.”

Madiha serves on the Executive Committee for the Connecticut Bar Association’s Young Lawyers Section.  Madiha is passionate about community service and serves as a Youth Mentor for the Klingberg Family Centers and a Law Student Mentor for the Lawyer’s Collaborative for Diversity.