Arbitration Agreements as a Condition of Employment are Enforceable

07.16.2018

The US Supreme Court recently upheld mandatory arbitration clauses in employment contracts that waived an employee’s right to bring class or collective actions. This continues the high Court’s trend of promoting individual dispute resolution over class and collective actions.  In a trio of cases argued together, the employees maintained that employers could not limit their rights to be part of a class action because it violates the NLRA in that it prohibits employees from the right to “engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection.”   The Court ruled that such class action waivers are enforceable and can be used to compel employees to resolve employment-related claims through individual arbitration proceedings. 

The decision will likely lead to more employers using arbitration agreements in employment contracts, severance agreements and other documents, as they realize the benefits of arbitration over litigating costly class action lawsuits.