In a monumental decision favoring employers, the U.S. Supreme Court has cleared the way for them to largely avoid employee class-action lawsuits.
In the five-four ruling issued May 21, 2018, the Supreme Court justices ruled that employers may legally require employees to sign away their right to join forces to dispute a workplace issue and instead agree to individual arbitration.
The ruling stems from three collective-action cases that were before the Court. The justices found that businesses do not violate the National Labor Relations Act if they include class-action waivers in arbitration agreements that employees must sign as a condition of employment. The Court held instead that mandatory arbitration agreements must be enforced under the Federal Arbitration Act.
The decision has huge implications on employers’ ability to contract with employees. And legal analysts say the decision means every business should review and re-evaluate internal contract language and policies addressing dispute resolution involving employees, either modifying existing policies or considering adopting such policies.
Analysts say they expect the number and use of class waivers will explode.