Does your business need a collective-action waiver?
Picture this: You’re CEO of a Baton Rouge area company employing some 250 people. About 30 of your employees decide they’ve been working too much overtime and have not been properly compensated for it.
They want to take you to court. What happens next?
In short, it depends on whether or not the company has a class- or collective-action waiver in its employee arbitration agreement, as Business Report details in a feature from the current issue. If not, you might be facing a collective-action lawsuit.
It appears simple: Add the waiver and let an arbitration panel quietly decide the matter.
That’s the main takeaway from a recent Supreme Court ruling, where it decided companies across the country can use arbitration clauses in their employment contracts to prohibit workers from banding together to take legal action over workplace issues.
While the United States Court of Appeals for the Fifth Circuit—the lower court governing Baton Rouge and other parts of Louisiana and Mississippi—already had this rule in effect, the court’s decision confirms that this law is here to stay, at least, for the time being, says attorney Tom Peak, a partner at Taylor Porter who specializes in employment and labor law.
The ruling also sheds light on another issue: whether or not companies should even have these waivers in their arbitration agreements.
Opponents of the court’s decision, including Justice Ruth Bader Ginsburg in her dissent, say class-action suits allow employee plaintiffs to pool together enough resources to make them more attractive clients for attorneys. Taking collective action, they add, also quells fears of employer retaliation.