As I noted earlier this week, the U.S. Supreme Court has approved of the use of class action waivers in arbitration agreements with employees.
My colleague, Gabe Jiran, has a recap of Epic Systems v. Lewis on my firm’s blog, Employment Law Letter, that you can access here.
So, it’s a foregone conclusion that employers of all shapes and sizes will start using arbitration agreements and insert provisions with class action waivers, right?
Not so fast.
As Jon Hyman astutely noted in his Ohio Employer’s Law Blog yesterday, this decision may not be the panacea employers are looking for.
For example, it might end up being more costly for employers because arbitration may be more costly than litigation.
Moreover, these costs only increase if you are arbitrating dozens, or hundreds, or thousands, of individual claims instead of one class or collective action. Don’t think for a second that this decision will end wage and hour litigation. Instead, plaintiffs’ lawyers, who currently have claimants opt-in to FLSA collective actions, will instead merely file a plethora of individual arbitration claims.
It’s a valid point but I’m not sure I buy into this entirely. Arbitration may be cheaper in many instances.
Moreover, part of the attraction that some lawyers have to wage/hour class actions are the attorneys’ fees that can get added on to the case automatically. Filing a lot of individual arbitration cases may be good in theory, but in practice? That’s still a lot of work for a plaintiff’s-side attorney to follow. While some enterprising attorneys will continue, we may see a thinning in the practice area as a result.
That said, I could certainly see unions encouraging this type of action at some workplaces — the death by 1000 paper cuts is something to keep in mind.
Employers may also be wary of entering into arbitration agreements with class action waivers because of the public backlash against forced arbitration, particularly in sexual harassment matters.
This is not new — indeed, there was a Law Tribune editorial in 2014 before #metoo was well-known that suggested legislative reforms in the area.
Employers that are seen as enforcing “coercive” arbitration provisions may face a social media or publicity campaign. Each employer will have to figure out its risk tolerance and how it wants to be seen by its employees and the public before implementing arbitration agreements.
Moreover, in states like California, there are statutes that allow for an employee to sue over workplace violations individually as well as on behalf of others, allowing for “representative suits”, similar to class actions. These “Private Attorneys General Act” cases may become the norm in California.
Could Connecticut follow?
These are just a few of the considerations that employers ought to be thinking about in light of the Epic Systems decision. The decision certainly provides employers with another tool in managing their workforce. The question on the table now is whether that tool is useful or not.