In House - The FindLaw Corporate Counsel Blog

Will SCOTUS Let You Stop Employees From Taking Class Action?

In an effort to prevent litigation from ever happening in the first place, many companies, on the advice of their in house or general counsel, have likely adopted arbitration clauses into all employment agreements. And as the courts have continued to uphold these clauses as valid, the extent of protection employers opted for has continued to grow.

Now, the typical employment agreement not only includes an arbitration clause, but it also has a prohibition on pursuing any collective action via arbitration. And if this seems harsh, many employers will be happy to take the next person waiting in line for your job who will be willing to accept this almost every-industry-wide standard. However, a trio of cases, recently argued before the U.S. Supreme Court may end the use of this legally lethal employment term.

No Class Claims Means No Claims

From an economics standpoint, this may seem counterintuitive as class action is more attuned to economical dispute resolution. But from the standpoint of attorney and legal business advisor, the effect of the prohibition on collective action renders the risk of multiple minor mistakes turning into a big one a near impossibility. Think of it this way, if a workforce of 1,000 are all underpaid by $5, the likelihood of anyone bringing a claim by themselves is much lower than the likelihood of a group of people all bringing the claim together, or all just piggybacking off one claimant's legwork.

When the ability to group together to redress grievances is taken away, employees are less likely to grieve more minor issues. And for the ones that do, there will be very little incentive which will make the arbitration process seem like a waste of time, which will be an effective example to others.

Be a Jerk, but Provide a Perk

Sure, it may be quite awful for an employee to realize their employer has taken away their rights to collectively arbitrate issues, but if there are daily catered lunches, good medical benefits, and most importantly, good compensation, employees tend to look past the legalese, even if they never knew it existed in the first place (even though they clearly initialed the clause).

Make sure to keep your eyes peeled for the opinion in Epic Systems Inc. v. Lewis.

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