A Change in the Landscape of Wage-and-Hour Litigation? Thoughts on the impact of the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion


In late April, the U.S. Supreme Court rendered a decision in the matter of AT&T Mobility LLC v. Concepcion. The case addressed the issue of whether companies, such as AT&T, could force customers into contracts which required arbitration, but waived and prohibited class-action-based arbitration proceedings (otherwise known as “class arbitration”). The Court ruled that such class arbitration waivers were valid and enforceable, despite previous decisions to the contrary by the California Supreme Court.

Many have observed the likely impact AT&T will have on commercial class actions. But, beyond the obvious effect on large commercial retailers and consumer transactions, the Supreme Court’s decision in AT&T will also almost assuredly have a substantial impact on how employers, large and small, approach employee hiring and the threat of wage-and-hour litigation. After all, one of the greatest threats to an employer’s financial stability is an employee class-action lawsuit, which usually comes in the form of an unpaid overtime or a meal and/or rest-break violation claim. Following the AT&T decision, employers may now be able to alleviate this danger by entering into arbitration agreements with its employees, through which employees give up any right to class-based arbitration. Such a process would force the matter out of the courts and into arbitration, while eliminating the possibility of class-based arbitration. So long as employers implement reasonable fairness provisions within the waiver (i.e. provisions that require the employer to pay for the costs of arbitration, provide a minimum recovery and adequate attorneys’ fees compensation for successful employee-claimants, and ensure that the designated forum and procedures for arbitration are fair and convenient to employees), AT&T will support the enforcement of such waivers.

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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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