For more than a few years — at least since the United States Supreme Court’s seminal 2017 decision in Epic Systems v. Lewis — employers across the country have weighed whether to have their employees sign arbitration agreements with class and collective action waivers.
While many employers have chosen to do so, many have elected not to.
The reasons for having arbitration agreements with employees are patent – avoiding class and collective actions, as well as avoiding sympathetic juries. And a great many employers can attest to the tremendous value of those agreements in helping them to dismiss class or collective action lawsuits and instead arbitrate claims with a single individual.
Given that value, some are puzzled by the decision not to require arbitration agreements. They often ask the same or similar questions — Why wouldn’t an employer want to use arbitration agreements, particularly if they will foreclose class or collective actions? What are the “cons” of arbitration agreements?
There are “cons” to these agreements — and they are not insignificant.
The following chart of the “pros” and “cons” may be helpful to employers considering whether to implement arbitration agreements, or to those reassessing their prior decisions. (We will refrain from addressing the impact of arbitration agreements upon representative actions under California’s Private Attorneys General Act to avoid a complicated analysis in light of United States Supreme Court and California Supreme Court decisions on the issue.)
[View source.]