Category Archives: Arbitration Agreements

Employers: Make Sure You Are A Party To Your Own Arbitration Agreements

Contributed by Steven Jados, August 7, 2018

52078340 - 3d illustration of rubber stamp on arbitration agreementWith the dust settling on the U.S. Supreme Court’s decision upholding the validity of class and collective action waivers in employee arbitration agreements, there is no better time to double-check that employee arbitration agreements are in proper form. A recent decision from the Seventh Circuit highlights one particular area for review: the employer’s name.

In Goplin v. WeConnect, Inc., the employee, Goplin, worked for WeConnect, and he signed an arbitration agreement at the beginning of his employment. Unfortunately for WeConnect, the arbitration agreement never once mentioned WeConnect.  Instead, the agreement referred to an entity named “AEI”—which was not Goplin’s employer.

When WeConnect attempted to enforce the arbitration agreement to compel Goplin to pursue his legal claims with an arbitrator, the court agreed with Goplin that WeConnect was not a party to the arbitration agreement, so WeConnect could not use the agreement to prevent Goplin from suing in court.

The bottom line is that employers must closely review employee arbitration agreements to ensure that all parties to the agreement are properly named—particularly when the employer has undergone a name change or merger in the time since the agreement was drafted. Doing so will help ensure that the agreement has a greater likelihood of enforceability if the agreement is challenged in court.

U.S. Supreme Court to Address Legality of Class Action Waivers in Arbitrations Agreements

Contributed by Suzanne Newcomb, January 17, 2017

16306823 - 3d illustration of scales of justice and gavel on orange background

16306823 – 3d illustration of scales of justice and gavel on orange background

The U.S. Supreme Court announced Friday, January 13, 2017 that it will hear a trio of cases concerning the right of employers to include class action waivers in employment-related arbitration agreements. Arbitration agreements are contracts through which an employee and an employer agree to resolve potential future disputes through binding arbitration rather than through the courts. Class action waivers are provisions in arbitration agreements that prohibit employees from joining together to arbitrate multiple related claims in a class or collective action. If such a waiver is enforced, employees are required instead to arbitrate each employee’s dispute separately.

The general counsel for the National Labor Relations Board (NLRB) has long argued, with varying degrees of success, that the right to engage in collective legal action is itself “concerted activity” protected by Section 7 of the National Labor Relations Act, and therefore, it is unlawful to ask employees to waive that right.

As we reported here, the Federal Court of Appeals for the Fifth Circuit (Louisiana, Mississippi and Texas) rejected the general counsel’s argument back in 2013 and upheld an employer’s right to include a class action waiver in an employment arbitration agreement. Other circuits agreed. However, the NLRB continued to challenge these provisions, and as a result, many employers remained wary.

In May 2016, the Federal Court of Appeals for the Seventh Circuit (Illinois, Indiana, and Wisconsin) sided with the NLRB’s general counsel. The seventh circuit struck down a class action waiver concluding it was an impermissible restraint of employees’ right to engage in “protected concerted activities.” Later in the year the ninth circuit followed suit. This split between the circuits further clouded the issue, leaving employers with no clear answer.

It is this difference of opinion between the federal courts of appeal that prompted the Supreme Court to agree to hear the issue. While a definitive ruling is not guaranteed, the fact that the Supreme Court granted certiorari (i.e. agreed to hear) three cases on the issue (consolidating them for purposes of oral argument) suggests the Court intends to issue a definitive ruling. Resolution on this issue will provide employers with welcome clarity and certainty regardless of how the Court ultimately rules on the legality of class action waivers in employment arbitration agreements.

For now, employers should stay the course. We will continue to monitor the issue and report on significant developments as they arise.