Suppose you have your employees’ sign agreements to arbitrate all of their employment disputes. (I’ve talked about arbitration agreements in many posts before.)
Can you have an arbitration agreement that says that an employee is precluded from bringing a Title VII (race or gender discrimination) class action claim in Court?
Employees have argued that because most arbitration agreements preclude an employee from bringing a class-wide claim in arbitration, they should be allowed to go to court because of a right to bring class actions — despite what the agreements might say.
The Second Circuit, which is the federal circuit covering Connecticut, last week disagreed saying that there is no “substantive statutory right” to pursue these types of “pattern or practice” class actions.
As the Court stated,”we see no reason to deviate from the liberal federal policy in favor of arbitration.”
Still left to be decided by the Second Circuit is whether it will reach the same conclusion for wage & hour collective actions (under the Fair Labor Standards Act). A decision on that issue is expected this year.
Why is this important?
Because even after many years, wage & hour class action litigation continues unabated.
If employers can reduce the threat of wage & hour class actions through an arbitration agreement, then that would represent the first real barrier to those claims.
For now, the stage is set. How the story will go for wage & hour class actions, however, is still to be determined.