Melissa A. Maione,left, and Matthew A. Green,right, of Obermayer Rebmann Maxwell & Hippel. Courtesy photos
It is no secret that arbitration agreements and class action waivers have, over time, become increasingly standard in countless areas of business—especially in the employment context. In 2019, the U.S. Supreme Court rendered three decisions that left little doubt that the Federal Arbitration Act (the FAA) reigns supreme, and that agreements to arbitrate between an employer and employee can be enforceable. Since that time, Federal and state governments have taken steps to limit the reach of the FAA in the employment context. This article explores the current state of the enforceability of arbitration agreements and the tension between the broad reach of the FAA and the governmental efforts under way to limit its reach.
One of the watershed 2019 Supreme Court decisions, Lamps Plus v. Varela, also made clear that ambiguous arbitration agreements can be fatal to an employer’s intent. This ruling teaches that clear drafting is critical to effectuate the aim of a company’s arbitration provision (such as expressly excluding the right to class arbitration if that is the desire). This article will also provide some practical tips to help ensure your arbitration agreements are well drafted to effectuate your desired outcome.
The Current State of Enforceability: State and Federal Tensions
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