Monday’s decision by the U.S. Supreme Court giving the green light for companies to enter into employment arbitration agreements that include a waiver to bring a class action is a continuation of a trend, according to class-action litigator Michael Brady.
Brady, a partner with Warner Norcross + Judd and chair of the firm’s Litigation Group as well as its Class Action Group, said the ruling in Epic v. Lewis extends prior rulings in consumer cases to the employment arena, confirming that clear employment contracts mean something and are enforceable. Some prior lower court decisions, and the National Labor Relations Board, had said that employees can’t waive their right to bring a class-action lawsuit to address an employment dispute.
“This decision says that it is entirely permissible for employees to enter into an employment agreement calling only for one-on-one arbitration,” Brady explained. “There’s nothing in the law or in public policy that prohibits an employee from waiving her right to bring a class action claim. Employees have no implied right to a bring a class-action when their contract says that they cannot do so.
“A number of U.S. Supreme Court decisions over the past several years have essentially recognized that class-action lawsuits can impose huge financial burdens and risks on companies, and these cases must satisfy various legal hurdles in order to proceed. And when a company by contract attempts to limit the other party’s right to bring a class action, that contract should be respected.
"It is no secret that class actions are often times brought to address fairly minor or non-existent issues that really caused no harm to anyone, but the overall potential exposure to the defendant can be crippling. When you consider the scope of the class of plaintiffs, the significant cost to defend, as well as the distractions and potential bad publicity, facing a class action can be daunting. Facing this situation, a defendant may be forced to settle, and the only group that benefits is the plaintiffs’ attorneys.”
In light of Monday’s ruling, Brady said that employers should take a fresh look at their employment agreements and consider adding a class-action waiver for employees if it makes sense for their industry and company.
“Putting these class-action waivers into employment agreements will help limit exposure for employers,” Brady said. “ As long as you are working with a valid contract and have a clear, conspicuous provision, the Supreme Court says they are enforceable.”
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