Enforceability of Class Action Waivers in Employment Arbitration Agreements Post-Concepcion

Class action waivers in employment agreements have been a point of contention for quite some time. More often than not, courts around the country have found that employment arbitration agreements with class action waivers are unenforceable. On April 27, 2011, in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), the U.S. Supreme Court held that the Federal Arbitration Act (FAA) preempted California’s rule deeming most mandatory consumer arbitration agreements with class action waivers unenforceable. In light of Concepcion, legal experts expected both federal and state courts to uniformly find employment agreements with class action waivers enforceable. However, courts have not been consistent and have gone in divergent directions. In this article we discuss some of these recent developments, particularly as they relate to drafting employment agreements.

Background -

The FAA provides that:

A written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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