There has been a significant increase in class and collective-action wage and overtime cases in recent years. These cases are expensive to defend and can result in tremendous financial liability to employers. To minimize liability, it is critical for employers to comply with the complex scheme of federal and state laws and regulations and to engage in self-audits to assess the level of risk. In addition, employers can be proactive and attempt to limit the risk of class and collective actions.
Specifically, employers that require their employees to enter into agreements to arbitrate claims against the company may further reduce the risk by including class and collective action waiver provisions in these agreements. These waivers, if enforced, would require employees who sign them to pursue wage and hour and other employment claims in arbitration, rather than in court, and on an individual rather than a class basis. However, as set forth below, notwithstanding the Supreme Court’s recent decisions validating the use of these waivers, the viability of these provisions has been questioned by several courts, agencies and, most recently, by Congress.
