For many employers, an important reason for rolling out arbitration is a desire to avoid class and collective actions. In this article, we consider whether arbitration agreements live up to their billing in this regard. As explained below, while they aren’t fool-proof, for many employers and many employment claims, arbitration agreements do in fact significantly reduce the risk of class or collective actions.
First, we present the general rule, which is good news for employers. Then we explain some of the exceptions, risks, and pitfalls that can land an employer in a class or collective action.
Read moreDecember was a very slow month for court decisions affecting independent contractors, but both decisions reported below confirm that effectively drafted arbitration clauses remain one of two “best friends” for businesses that engage independent contractors. On the very day the U.S. Supreme Court issued its decision in New Prime Inc. v. Oliveira in January 2019, we predicted here that, despite some commentators’ exuberance and others’ despair, the decision “may have little or no impact as to whether workers classified as independent contractors can be compelled to arbitrate their IC misclassification claims.” In New Prime, the Supreme Court held that a court, not an arbitrator, should decide if an IC is covered by the Federal Arbitration Act’s arbitration exclusion for workers engaged in interstate transportation. We commented that the FAA is not the only basis upon which companies can seek to compel arbitration; most state arbitration laws, which typically do not have exclusions for interstate transportation workers, also may provide an alternative basis to compel arbitration of IC misclassification class action claims. That is exactly what transpired in one of the two IC arbitration cases we discuss below.
Read moreIn the decade since the Supreme Court decided AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) and American Express Co. v. Italian Colors Restaurants, 570 U.S. 228, 233 (2013), arbitrability has become a threshold question for class action practitioners. On the plaintiffs’ side, a cautious practitioner might avoid bringing a claim that falls within an enforceable arbitration clause. And on the defendants’ side, the first move will be to invoke an arbitration clause with a class waiver whenever there is contractual privity between a plaintiff and a defendant. Arbitrability thus becomes a quasi-dispositive question, independent of a case’s merits.
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