U.S. Supreme Court building, Washington, D.C. (Photo: Diego M. Radzinschi/ALM)

On Monday, the U.S. Supreme Court held that companies have the right to compel employees to sign waivers that prevent them from bringing class action lawsuits against their employers.

The high court's ruling to uphold class action waivers, which often are found in employee arbitration agreements, is being viewed as a victory from the corporate perspective and a green light for employers to use these tools—though some employment attorneys are unhappy about the development.

Noah Finkel, a partner at Seyfarth Shaw who was lead counsel for Verona, Wisconsin-based Epic Systems Corp. in Epic Systems v. Lewis in lower courts and co-counsel for the company at the Supreme Court, said this is a big step forward.

“It's a significant victory for employers in that those that have arbitration agreements that contain class and collective action waivers are now able to enforce them without any question,” Finkel said.

Finkel said that companies that don't use arbitration agreements with class action waivers already can now strongly consider having one.

Brian Cousin, a partner at Dentons who represents companies in employment cases, agreed this ruling may be the push needed for companies to enact such policies.

Attorneys representing employers said there are pros for companies that prohibit employment class actions and require arbitration, including privacy and speed. Cousin said, that claims go oftentimes through arbitration much more quickly than they go through the courts. He added that, because arbitration is generally private, resolving claims this way can save the company's reputation.

Finkel acknowledged that this confidentiality can spur objections.

“Because arbitration usually contains rules maintaining confidentiality, there is a potential objection consistent with the Me Too movement that this is something that would keep harassment and other employee claims confidential,” Finkel said.

He said an arbitration agreement should suit the company's needs.

“There may be ways to limit the scope of an arbitration program that limits a class waiver,” Finkel explained.  “For example it might be the employer does not want to cover harassment claims in its arbitration so that those are publicly litigated in court, while other claims are subject to arbitration on an individual basis. That might be one way to have the best of both worlds.”

As for how this will affect other companies facing cases over class action waivers and forced arbitration, Jim Evans Jr., a partner at Alston & Bird in Los Angeles who works on employment matters, pointed to a high-profile class action in California federal court against Uber Technologies Inc.

He said the Epic Systems opinion is “likely to doom completely the class claims in the O'Connor v. Uber litigation.”

In O'Connor, the plaintiffs are seeking tip repayment and reimbursement for expenses such as gas and the cost of maintenance from Uber, which has countered that claims in this class action are invalid due to arbitration agreements with class action waivers signed by drivers.

The Ninth Circuit Court of Appeals delayed its consideration of O'Connor, knowing the high court would soon be ruling on forced arbitration of class action claims.

Evans said he takes issue with the idea that the Supreme Court's opinion is taking away the rights of employees.

“In my experience, arbitration provides a meaningful means of employees vindicating their rights in an expeditious way, [for] which the costs are all borne by the employer,” Evans said. “I don't think this crushes the rights of employees to any extent.”

Though the Epic Systems ruling has been deemed a big win for companies, plenty of attorneys are not thrilled with the outcome.

Cliff Palefsky, a partner at the Law Offices of McGuinn, Hillsman & Palefsky in San Francisco, who represents plaintiffs in employment cases, called the high court's decision “demoralizing” and an “assault on civil rights and labor laws.”

“It was a political, predetermined decision, essentially. It was far removed from the law,” Palefsky said.

He said the employment relationship is different from other commercial relationships and that the privacy provided by arbitration does not allow for positive change to occur around issues such as workplace harassment.

“There will be no deterrent effect,” Palefsky said. “The goal is not to have a jury trial; the goal is to prevent harassment. And the way to do that is if you have a public lawsuit, like Gretchen Carlson's [against the late Roger Ailes of Fox News], it does more to change conduct than 100 separate arbitrations.”