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U.S. Supreme Court Issues Another Decision Upholding Individualized Employment Arbitration Agreements

By: Evelyn Schonberg | 4/29/2019 | Category: Employment Law-Arbitration

Many of you who have worked with me over the years are familiar with my recommendations of adopting employment arbitration programs.  Arbitration requires employees to place their employment related disputes before an arbitrator rather than a judge and jury. As I wrote last year, Time to Reconsider an Employment Arbitration Program by “avoiding the courts, the dispute proceeds to resolution quicker in front of an experienced arbitrator; employers avoid the high attorneys’ fees and unpredictable verdicts associated with jury trials; and privacy can be maintained throughout the arbitration. At the same time, employees are provided a forum in which they receive a fair and impartial hearing on their claims and are entitled to all rights they have under the laws, with the exception of a jury trial.

On April 24, 2019, the United States Supreme Court issued yet another decision upholding arbitration agreements between employees and employers. In Lamps Plus, Inc. v. Varela, the employer’s arbitration agreement clearly required individual employee claims to be placed in arbitration but was ambiguous as to whether employees were required to arbitrate claims in which they assert classwide relief.  The Court held that the Federal Arbitration Act requires that such an ambiguity be resolved in favor of individualized arbitration since it “may not infer from an ambiguous agreement that parties have consented to arbitrate on a classwide basis.”   

The effect of this decision is that the employees were required to arbitrate their claims against their employer on an individualized basis instead of a classwide basis. The benefit to the employer is that it will avoid a very lengthy and expensive class action that could have involved hundreds of employees.  

Mandatory arbitration agreements with class action waivers are generally a very effective mechanism to control and limit exposure and liability for most employment-related claims. Please contact one of our attorneys to discuss whether your business could benefit from adoption of such agreements and if so, the best manner for its implementation. 

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