Last year, the United States Supreme Court ruled that class action waivers in employment arbitration agreements are enforceable. But, the ruling did not address an agreement that is silent or ambiguous regarding the intent to proceed as a class.
This issue was recently resolved by Lamps Plus v. Varela, in which the United States Supreme Court held that under the Federal Arbitration Act, a court may not compel class arbitration unless the parties have expressed their clear consent.
This case involved an arbitration clause that was ambiguous regarding the parties’ intent to arbitrate as a class. The Supreme Court decided the issue on the basis that the Federal Arbitration Act, which governed the agreement, requires that courts enforce arbitration agreements based on the intent of the parties. Since intent was not clear in the arbitration agreement, the Court held it would not be proper to compel class arbitration.
Despite the favorable ruling for employers, the best practice is to avoid any ambiguity on the issue of intent to proceed as a class by including a class action waiver in employment arbitration agreements.
The author would like to gratefully acknowledge the assistance of Joanne Warriner.
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