Arbitration agreements between employers and employees are very common. As of 2018, an Economic Policy Institute poll estimated that 56% of private-sector, non-union employees were subject to such agreements. Based on recent developments in arbitration law, that figure has surely risen. Arbitration of employee disputes can carry with it certain advantages. Perhaps the primary reason that companies have arbitration agreements with their employees is because, unless such agreements are drafted specifically to include class or collective arbitration, they preclude class or collective treatment of claims. See Lamps Plus v. Varela, 139 S. Ct. 1407, 1419 (2019). A properly drafted and executed arbitration agreement governed by the Federal Arbitration Act (FAA) is a powerful defense to employment-related collective or class actions.

However, outside of its class-busting properties, arbitration can be a mixed bag for employers. Arbitrations typically require much heftier filing fees than do courts and require paying fees directly to the arbitration administrator and the arbitrator. Many employers have found that summary disposition of cases can be more difficult to come by in arbitration, as compared to, for example, federal district court. Add to this limited rights to appeal, the perception (right or wrong) that arbitrators sometimes “split the baby,” and employers may wonder if there are alternatives to arbitrating all of their employment disputes. Could an employer and its employee, for instance, agree to arbitrate only those claims that pose a threat of class or collective treatment? Or, alternatively, does an employer need arbitration at all? Is it possible to agree with an employee to waive proceeding as a representative or participant in a class or collective action without also agreeing to arbitrate?

Waiver of Collective or Class Actions in Arbitration