A high-stakes legal battle between employers and employees

As a condition of being hired, can employers mandate that new employees waive their rights to pursue class action lawsuits?

More businesses are requiring newly hired staff to sign agreements mandating individual arbitration to resolve workplace disputes. The growing trend is in response to an increase of employees collectively filing lawsuits over unpaid wages.

For employers, the financial stakes are significant. Individual lawsuits present fewer challenges in defending themselves. Conversely, adverse class action rulings can result in plaintiffs being awarded significant financial damages, impacting a business’ bottom line.

The Supreme Court recently heard arguments on the rights of workers to pursue class-action claims against the businesses that employ them. The three cases consolidated into one include Ernst & Young LLP, Murphy Oil USA Inc., and Epic Systems Corporation.

Liberal justices fear that rulings for employers would undermine, if not radically change President Franklin Delano Roosevelt’s New Deal that helped workers during the Great Depression. They see workers who join together and file disputes against their employer as a significant “driving force” of existing federal labor laws.

They also understand the challenges employees face in filing individual cases. Based on the potential legal costs involved in one staff member suing an employer, a dispute may not be financially worth pursuing. Simply put, the jurists find strength in numbers.

Justices who lean conservative argued that employees could still take advantage of collective actions by banding together and hiring one lawyer to bring claims. While each case would be arbitrated individually, rulings in favor of workers could potentially discourage employers from mandating arbitration as part of the hiring process.

Wage disputes not only affect bottom lines of businesses, but also their public reputations. For help, contact VanAntwerp Attorneys, LLP, at 606-618-0698.