A new law signed by President Biden brings significant changes to employers’ ability to require arbitration of certain disputes with employees and could lead to an increase in sexual assault and sexual harassment claims against employers in court.  On March 3, 2022, President Biden signed into law the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” (the “Act”).  The Act amends the Federal Arbitration Act (“FAA”) to provide that predispute arbitration agreements and predispute joint-action waivers relating to sexual assault and sexual harassment disputes are unenforceable at the election of the person or class representative alleging the conduct.  The Act took effect immediately upon signing.

Continue Reading New Law Ends Mandatory Arbitration for Sexual Assault and Sexual Harassment Claims

On August 20, 2019, the Ninth Circuit held in Dorman v. Charles Schwab Corp. that a 401(k) plan’s mandatory arbitration clause was enforceable in relation to a breach of fiduciary duty claim brought under ERISA § 502(a)(2).  No. 18-15281 (9th Cir. Aug. 20, 2019).  This is the first case in which the Ninth Circuit concluded that such fiduciary breach claims could be arbitrated.

Continue Reading Ninth Circuit Opens the Door to Arbitration in ERISA Fiduciary Breach Claims

The Supreme Court put to rest years of uncertainty regarding the enforceability of class action waivers for employees when it decided Epic Systems Corp. v. Lewis, 582 U.S. ___ (2018) on May 21.  In a 5-4 decision, the majority held that employers do not violate the National Labor Relations Act (NLRA) or the Federal Arbitration Act (FAA) by requiring employees to sign arbitration agreements that waive their rights to bring class action suits.  While the Supreme Court’s decision focused on class action waivers in the context of arbitration agreements, its holding could be extrapolated to uphold employee class action waivers included in any agreement between an employer and employee.

Continue Reading SCOTUS Upholds Employee Class Action Waivers in Epic Systems

In two closely watched cases, the Second Circuit has ruled that the Fair Labor Standards Act (“FLSA”) does not preclude the waiver of class action claims (known technically as “collective actions” under the FLSA). In decisions issued on August 9th and 12th, the Second Circuit reversed lower court rulings that had refused to enforce individual arbitration agreements signed by the plaintiffs.  Instead, the appeals court sent the cases back to the district courts with instructions to compel the plaintiffs to honor their agreements with their employers and to submit their FLSA overtime disputes to separate, individual arbitration proceedings.

Following the Supreme Court’s recent decision in American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013), the Second Circuit in Sutherland v. Ernst & Young, case no. 12-cv-304, rejected the plaintiff’s arguments that the FLSA contained a “contrary congressional command” barring waivers of class arbitration, and, further, that the plaintiff could not “effectively vindicate” her rights in an individual arbitration, inasmuch as such a proceeding would be “prohibitively expensive.”  In Raniere et al. v. Citigroup Inc. et al., case no. 11-cv-5213, the Second Circuit issued the same decision on the same basis.
Continue Reading Individual Arbitration Agreements Held to Preclude Class Actions under FLSA