Connecticut Employment Law Blog Insight on Labor & Employment Developments for Connecticut Businesses

The Quickly Shifting Landscape of Class Actions and Arbtirations

Posted in Class Actions, Litigation, Wage & Hour

Now that the dust has settled a bit, it’s time to look at the long-term impact of last month’s Supreme Court decision in AT&T v. Concepcion for employment matters.  (For a great analysis of the decision itself, see this SCOTUSblog post.) 

All the analysis that has been coming out seems to suggest that there are two main areas that seem ripe for adoption in the employment arena.  

First, employers may want to use it as a preemptive strike against potential class actions by employees (such as suits challenging the exempt/non-exempt classification).  How? By including a waiver of class claims in employment arbitration agreements. 

Easy enough, right? Not exactly.  Employers will still want to be sure that the arbitration process that they are pushing employees into is procedurally and substantively fair. The best post-AT&T Mobility analysis I’ve seen that discusses this even further has been this excellent post in Lexology.  

But besides being used for current employees, employers may want to consider adding provisions in their settlement agreements of wage & hour class actions as well.  Employers who have been through those suits know that a settlement for past actions typically doesn’t prohibit lawsuits in the future for events that haven’t yet occurred. 

By including a provision that prevents settling class members from starting a class action in the future, the employer buys a bit of protection.  (And for those concerned that such a provision may fall through, the employer could still include a liquidated damages provision if the employee joins the class action.)  

Of course, adopting the Supreme Court’s case isn’t a slam dunk for all employers. For example, by eliminating class actions, is the employer able (or ready) to face numerous individual arbitrations across the country? And is the employer ready to pay costs and attorneys fees as these types of arbitrations may require? 

At the very least, however, all employers should consider discussing the case with their trusted advisor or attorney to determine if an arbitration and class action waiver provision is appropriate.