Certain Contractual Limitations Of Liability For Discrimination Lawsuits Are Valid

If you are an employer, the prospect of any kind of discrimination suit can be daunting and scary, as it should be-discrimination is not something to take lightly. But the threat of a discrimination or harassment lawsuit is made even more daunting by the prospect of that lawsuit being a class action lawsuit.

Anti Class Action Agreements

Many employers have attempted to avoid this problem by using employment agreements that require employees to waive their rights to file a class action, and instead, to submit to individual, binding arbitration. But the rights being waived aren’t just any right to sue—they are employment, labor and civil rights federal laws. Can an employer limit employees by making them sign such an agreement?

Court Says Restrictions are Valid

That’s the exact question that the Supreme Court dealt with just a few years ago. The Court ruled in favor of the employers. The case revolved around a conflict between two laws.

On one hand, the Federal Arbitration Act (FAA) makes contracts that require arbitration to be valid and binding. On the other hand, the National Labor Relations Board specifically says that employees are allowed to engage in behavior that is called a “concerted activity,” which is done for “mutual aid or protection.”

In other words, arbitration is legal and binding under federal law, but federal law also says that employees have a right to work together, as they would in a class action.

So which law takes precedence? The Court said that nothing in any discrimination laws limits the right of employers to use arbitration. Had congress intended for workers to be free from arbitration clauses, or had congress intended to protect the rights of workers to file class actions in every situation, it could have said so, but it did not, according to the court.

Many justices did not agree with the decision. They had concern that limiting employees to individual actions, could stifle their ability to enforce important anti-discrimination federal laws.

Make Sure Your Agreements Comply with the Law

It should be noted that just because an arbitration or anti-class action provision in employment contracts is legal, an employer still needs to make sure that arbitration provisions comply with other state laws.

For example, any attempt to force employees to waive rights to class actions, or to force them to arbitration, must be disclosed in clear type (bolded or larger font), set off from the other font in the agreement.

Employers should be wary not to impose an undue burden on the employee, such as making them pay for all the expenses of arbitration, making them travel far to have the arbitration, or making them waive important rights (such as the right to attorneys fees if they win), which they could otherwise receive if they did not go to arbitration.

Call the West Palm Beach employment lawyers at Pike & Lustig for help today if you are an employee or an employer.