The parties agree that any and all disputes, claims or controversies arising out of or relating to the employment relationship between the parties shall be resolved by final and binding arbitration.
Employers often include this paragraph, or a similarly worded provision, in employment agreements to, among other things, avoid class action litigation with their employees.
But if an employee wants to initiate a class action despite this provision, will the provision protect the employer from class action litigation?
No, according to a recent U.S. Supreme Court decision.
On April 24, 2019, in Lamps Plus, Inc. v. Varela, the Court ruled that when an agreement is ambiguous on the issue of class arbitration, the parties could not be compelled to arbitrate on a class wide basis. In other words, courts are not permitted to infer that the parties made such an agreement when the agreement is vague about that issue.
In some ways, the Court expanded its prior ruling in Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010), which barred class arbitration when a contractual provision was silent on the issue.
The Court emphasized that consent to arbitration is an essential principle that has guided its analysis on requiring the parties to arbitrate. Neither silence nor ambiguity is sufficient to demonstrate consent.
Only the parties’ express consent to class arbitration is sufficient to protect the employer from class action litigation and to compel the parties to arbitration.
Should you need assistance in reviewing your employment contracts, please contact the Gunster employment law practice at (561) 650-1980.
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This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.
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Gunster, Florida’s law firm for business, provides full-service legal counsel to leading organizations and individuals from its 13 offices statewide. Established in 1925, the firm has expanded, diversified and evolved, but always with a singular focus: Florida and its clients’ stake in it. A magnet for business-savvy attorneys who embrace collaboration for the greatest advantage of clients, Gunster’s growth has not been at the expense of personalized service but because of it. The firm serves clients from its offices in Boca Raton, Fort Lauderdale, Jacksonville, Miami, Naples, Orlando, Palm Beach, Stuart, Tallahassee, Tampa Bayshore, Tampa Downtown, Vero Beach, and its headquarters in West Palm Beach. With more than 280 attorneys and consultants, and over 290 committed professional staff, Gunster is ranked among the National Law Journal’s list of the 500 largest law firms and has been recognized as one of the Top 100 Diverse Law Firms by Law360. More information about its practice areas, offices and insider’s view newsletters is available at www.gunster.com.
