Employers have long favored arbitration as a means of efficiently resolving disputes with employees. Business-minded employers are often drawn to the benefits afforded by private arbitration in comparison to the judicial process. These benefits include “the reduced cost, increased speed, private nature, and elimination of juries.” David Sherwyn et al., “In Defense of Mandatory Arbitration of Employment Disputes: Saving the Baby, Tossing out the Bath Water, and Constructing a New Sink in the Process,” 2 U. Pa. J. Lab. & Emp. L. 73, 100 (1999). The arbitral forum for employers is under threat, however, as both courts and legislatures continue to chip away at employers’ ability to enforce arbitration agreements. Recent judicial decisions and legislation exemplify this growing trend and serve as a warning signal for employers seeking to adjudicate employment claims out of court.
Both the Federal Arbitration Act (FAA) and New Jersey Arbitration Act purportedly enunciate state and federal policies favoring arbitration. Atalese v. U.S. Legal Services Group, L.P., 219 N.J. 430, 440 (2014). Despite this seemingly clear judicial declaration, you would be forgiven for thinking the opposite in light of recent case law. Multiple high-profile decisions have made it harder for employees to enforce arbitration agreements. For example, in Morgan v. Sundance, Inc., 142 S. Ct. 1708 (2022), the United States Supreme Court invalidated a widely held rule concerning waiver of the right to arbitration. In Morgan, the plaintiff worked at a Taco Bell franchise owned and operated by the defendant employer. The plaintiff alleged wage-and-hour violations and brought suit in federal court. The defendant employer initially defended these claims in court, but after eight months of litigation, moved to stay the proceedings and compel arbitration. The plaintiff opposed this motion, arguing that the employer had waived its right to compel arbitration by litigating the case in court.
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