An April decision by the U.S. Supreme Court allows general counsel for Texas employers to obtain significant protection against employee class action suits. The key is to combine a class action waiver with a mandatory arbitration provision in company employment policies. The protection can extend to all sorts of employee class action claims, including overtime/employee misclassification suits that have become increasingly common in recent years.
In Stolt-Nielsen S.A., et al. v. Animalfeeds International Corp. , the Supreme Court held that where parties agree to arbitrate their disputes, neither side can be forced into a class action unless the parties expressly agree to allow class actions. Stolt-Nielsen involved an arbitration agreement between two businesses, and on its face it would not appear to impact employer-employee issues. The case’s holding, however, directly translates to the employment context in states such as Texas, whose courts look favorably on mandatory arbitration agreements between employees and employers.
