In a big win for employers, the United States Supreme Court held last week that, under the Federal Arbitration Act, an arbitration agreement can prohibit an individual from commencing or participating in a class action.
In the case, AT&T Mobility v. Concepcion, the California Supreme Court had established a rule that an employment arbitration agreement was not enforceable if it waived an individual’s right to file a class action. U.S. Supreme Court, in a 5-4 decision, held that state laws cannot interfere with an arbitration agreement’s elimination of the class action mechanism to resolve disputes. In my personal opinion the decision, which was authored by Justice Scalia, is extremely outcome-oriented. It continues the conservative wing of the Court's pro states' rights (unless they inconvenience corporations) stance. The dissenting opinion does a good job of outlining the logical inconsistencies in the majority opinion.
You can download a copy of the opinion here: AT&T Mobility v. Concepcion
While this was not an employment case, its importance in the employment law arena cannot be overemphasized. Employers may be able to use this decision to effectively eliminate all employment-related class actions, possibly including wage & hour collective actions for unpaid overtime. On the other hand, arbitration still has many drawbacks for employers. The cost of arbitration fees have steadily increased to the point where it is now quite a bit more expensive to arbitrate a case than to litigation in traditional courts. Additionally, arbitration outcomes are largely unappealable. These issues are not insignificant.
Despite its downsides, however, employers are increasingly inserting arbitration clauses with class-action bans into employment contracts, presenting them to employees on a take-it-or-leave-it basis. The Concepcion decision goes a long way towards eliminating an important means for enforcing longstanding civil rights and employee protections. The Court's activist efforts fly in the face of public opinion as well: according to recent polls, a solid majority of Americans (59%) opposes forced arbitration clauses in the fine print of employment and consumer contracts, including both men and women, as well as majorities of Democrats, Independents, and Republicans.
So what is an employee to do if faced with an arbitration agreement? First, don't just sign anything and everything that an employer puts in front of you. If your employer gives you an arbitration agreement and demands that you sign it, ask to take it home and read it. Then, visit with your co-workers and consider refusing to sign the agreement as a group. There is power in numbers.
Second, call your U.S. senators and your member of congress and encourage him or her to support passage of the Arbitration Fairness Act (AFA) of 2011. The AFA would ban forced arbitration in employment, consumer, and civil rights disputes.
Read More Related Stories After the Break . . .
- Supreme Court Class Ruling Is Win for Business - New York Times
- Justices rule against class-action efforts - Washington Post
- Are Some Employment Law Class Actions in Jeopardy? New Supreme Court Case Suggests Path - Connecticut Employment Law Blog
- Supremes Uphold Arbitral Class-Action Waivers - Workplace Prof Blog