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U.S. Supreme Court Finds that Class Action Waivers in Employment Arbitration Agreements Are Enforceable

Following six years of uncertainty, employers now have assurance that class action waivers in arbitration agreements are enforceable and do not violate the National Labor Relations Act (NLRA). Since 2012, many employers who had entered into written agreements with employees to individually arbitrate employment disputes such as wage-hour claims, found certain courts disregarding such arbitration agreements and thereby allowing employees to bring class and collective actions regarding employee disputes. In a 5–4 decision, the U.S. Supreme Court in Epic Systems Corp. v. Lewis, Case No. 16-285, resolved this uncertainty, holding that the Federal Arbitration Act (FAA) encourages enforcement of arbitration agreements and that agreements to arbitrate disputes through individualized arbitration proceedings do not violate the NLRA. Employees who have entered into class action waivers with their employers can no longer use the NLRA as a basis to evade their agreement to individually arbitrate their employment disputes.

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