The Supreme Court recently held in Epic Systems v. Lewis, 584 U.S. __ (2018), that arbitration agreements which include waivers of employees’ rights to bring class or collective actions are enforceable under the Federal Arbitration Act (FAA), and that the National Labor Relations Act (NLRA) does not override this principle in the FAA. Following Epic, many employers are re-examining whether to include class action waivers in existing arbitration agreements, and further whether to adopt mandatory arbitration programs covering all of their employees.

Although the prospect of eliminating the risk of class actions weighs strongly in favor of adopting an arbitration program, employers who opt for an arbitration program should do so with their eyes wide open regarding the associated costs. Whereas in litigation, taxpayers cover the costs of the judge, the courthouse, and the court reporter, in arbitration the parties must allocate analogous costs of the tribunal among themselves.

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