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Employment Arbitration Agreements: Class Action Waivers

OnDemand Webinar (95 minutes)

Get key takeaways from the U.S. Supreme Court decision in Epic Systems, and what this means for employers going forward.Many employers require that their employees, as a condition of employment, agree to resolve employment-related disputes through mandatory arbitration. Quite often, those arbitration agreements also contain provisions -- known as class action waivers -- that prohibit the employee from pursuing any such claims on a class, joint, or collective basis. Prior to May 21, 2018, employers faced uncertainty regarding the enforceability of class action waivers in the employment context. Indeed, the U.S. Circuit Courts of Appeal were split on the issue, leaving nationwide employers in the unenviable position of having to determe corporate policy on a jurisdiction-by-jurisdiction basis. That was, however, until the U.S. Supreme Court issued its 2018 decision in Epic Systems Corp. v. Lewis, in which it held that the Federal Arbitration Act mandates the enforcement of class and collective action waivers contained in employment-related arbitration agreements. Having cleared this first hurdle, employers are left to consider open questions including: how to enforce class action waivers when faced with putative class action claims in court; how to draft class action waivers and arbitration agreements designed to reduce the risk of enforceability challenges; and, at a fundamental level, whether to include arbitration agreements and class action waivers in new employment agreements or to enforce waivers in existing agreements. This content will address the legal, practical, and public policy considerations that all employers must consider in answering these questions. This material will explore the Supreme Court's decision in Epic Systems Corp., and review the history that led to it, as well as other legal principles governing arbitration agreements and class action waivers. The topic will also provide guidance on practical issues facing employers, including how to draft effective and enforceable class action waivers, how to limit the risk of challenges to such waivers, and how to enforce waivers in response to class or collection actions filed in court. Finally, this content will delve into the public policy and practical business considerations that an entity must balance to determine whether to require its employees to agree to individual arbitration in the first place. This topic is essential for individuals attempting to lead their businesses and clients through the developing and often controversial subject of mandatory arbitration agreements and class action waivers contained therein.

Authors

Mark D. Pomfret, K&L Gates LLP Robert W. Sparkes III, K&L Gates LLP

Agenda

Introduction to Arbitration: The Basics

• Arbitration: What Are the Benefits?

• The Federal Arbitration Act (FAA)

• Class Arbitration vs. Individual Arbitration

• Class and Collective Action Waivers

The Enforceability of Class Action Waivers in Arbitration Agreements

• Enforceability of Class Action Waivers

• Class Action Waivers in Employment Agreements: History of the Circuit Split and Tension Between the FAA and the National Labor Relations Act (NLRA)

• Supreme Court Resolves the Circuit Split: Discussion of Epic Systems Corp. v. Lewis

Enforcing Class Action Waivers in the Courts

• Motions to Compel Individual Arbitration

• Waiver of Right to Compel Arbitration Through Litigation Conduct

• Who Decides Threshold Questions of Arbitrability

Drafting Arbitration Agreements and Class Action Waivers in Employment Agreements

• Choosing the Form of the Arbitration Agreement

• Crafting Explicit Waiver of the Right to Pursue Class Claims, Joint Claims, and Other Collective Actions in Court and in the Arbitral Forum

• Including Certain Arbitration Provisions to Reduce the Risk of State Law Challenges

• Specifying the Arbitral Forum and Applicable Rules of Procedure to Be Applied

• Delegating Questions of Arbitrability: Authority Given to the Arbitrator or the Court?

Mandating Arbitration for Employees: Public Policy and Practical Considerations

• Benefits of Class Action Waivers and Arbitration:

- Limits Exposure to Class Action Litigation and Potentially High Damages Awards

- Provides Confidentiality in Individual Settlements and Arbitration Results to Reduce Risk of Copycat Lawsuits

- Offers Streamlined Procedures and Quicker, Less-Costly Resolution of Claims

• Potential Negatives of Class Action Waivers and Mandatory Arbitration Agreements for Employees

- Limited Appellate Options

- Negative Press Attention

- Ability to Recruit and Retain Top Talent

• Balancing Potential Positive and Negative Attributes of Class Action Waivers Is an Entity- and Business-Specific Decision