In a significant victory for employers, the U.S. Supreme Court ruled that arbitration clauses in employment contracts are enforceable even if they prevent workers from bringing class action lawsuits. The court considered three cases: all involving employees seeking to litigate Fair Labor Standards Act (overtime or minimum wage) and related state law claims through class or collective actions in federal court. Each employee had an employment agreement requiring individual arbitration proceedings.

Arbitration is often preferred by employers because it offers greater confidentiality, often quicker decision making, and some control over selecting the lawyer who serves as the arbitrator. Arbitration clauses requiring one-on-one proceedings prevent employees from banding together and pooling resources against an employer while represented by (usually) one law firm. Oftentimes, this translates into major litigation cost savings for employers.

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