When Should Employers Use Arbitration Agreements?

by Davis Wright Tremaine LLP

[author: Michael J. Killeen]

If an employer wants to limit the risk of being forced to defend an employee class action, entering into individual arbitration agreements with employees is now a strategic option. In a series of recent decisions, the U.S. Supreme Court has stated emphatically that the Federal Arbitration Act (FAA), which applies to most employment relationships, not only favors arbitration over litigation, but also allows the parties to enforce the terms of an arbitration agreement that limits or excludes the use of the class action procedure. Although attorneys representing employees, some state court judges, and some government agencies continue to look for ways around the Supreme Court rulings, the strong likelihood is that employment arbitration agreements limiting or excluding the use of class action procedures will nonetheless be enforced in most instances.

Even as  some state court judges search for ways to avoid or defy the U.S. Supreme Court rulings on the preemptive effect of the FAA with regard to arbitrations, the majority of courts appear to be following the rulings faithfully.

Be aware, however, that the U.S. Supreme Court decisions have not addressed squarely so-called “procedural unconscionability.” This refers to state law policies related to the circumstances under which the arbitration agreement was entered into as well as arbitration requirements that purport to place procedural burdens on the employee such as bringing the arbitration in a location far away from the employee’s place of work or residence, placing an unusually short statute of limitations on the employee, or placing significant cost burdens on the employee for the administrative costs of the arbitration or attorney fees of the prevailing party. Employers should realize that in preparing and implementing employment arbitration agreements, they must be careful not to run afoul of state public-policy procedural rights and obligations.

For more discussion of recent developments regarding employment arbitration agreements and other wage/hour issues, please join Mr. Killeen and some of his colleagues who are members of the national Wage & Hour Defense Institute, at their next one-hour webinar entitled "Quarterly Update on Developments in Wage & Hour Law." It is scheduled for Sept. 19, 2012, beginning at 12:00 p.m. EDT. In addition to Mr. Killeen of Davis Wright Tremaine, the other WHDI member panelists are Lawrence Peikes of Wiggin and Dana LLP (Stamford, Conn. and New York City), Bryant Banes of Neel, Hooper & Banes (Houston), and Andrew Naylor of Waller, Lansden, Dortch & Davis (Nashville, Tenn). Following a 40- to 45-minute discussion of the latest court decisions and regulatory developments in this rapidly evolving area of the law, the panelists will field questions from participants. For additional information, or to register for the webinar, please visit http://www.eventbrite.com/event/3731775842.


Written by:

Davis Wright Tremaine LLP

Davis Wright Tremaine LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.