Supreme Court Revives Class-Action Waivers as Tool to Limit Wage and Hour Collective Actions

In a significant victory for employers, the Supreme Court ruled Monday that employers may require employees to submit their claims to individual arbitration and waive participation in class or collective actions. In the hotly anticipated 5-4 decision, Epic Systems Corp. v. Lewis, the Supreme Court rejected opinions by the National Labor Relations Board and two federal appellate courts, which had held that requiring employees to waive participation in wage and hour collective actions violated federal labor law. The Supreme Court held that, under the Federal Arbitration Act, arbitration agreements that waive collective and class action claims are enforceable.

Wage and hour collective and class actions have become a common – and costly – form of litigation for employers in recent years. The Supreme Court’s opinion preserves arbitration as a tool to significantly limit exposure to these types of lawsuits. Employers should consider whether to revise employment agreements, arbitration agreements and other employment policies to take advantage of this important new ruling.

If you have any questions about the significance or impact of this decision, please contact one of Honigman’s Labor and Employment attorneys.