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Arbitration vs. Class Action Lawsuits Filed by Employees Continues On

Monday, December, 14, 2015

One of the most volatile current issues in employment issues involves whether workers must arbitrate claims individually, as opposed to using class action lawsuits to resolve an employment law issue. Those in favor of arbitration just received more support as a ruling was won concerning overtime claims being heard in arbitration, as opposed to class action. The case was filed in a New Jersey federal court.


The employees involved in the case lost their attempt to have the US Supreme Court review their claim. Their employer fought through the courts to overturn an arbitrator’s decision concerning company agreements with former staffing managers that would allow them to proceed in class action legal efforts. The original dispute was over overtime claims.


The most recent decision means the only things that can be litigated are the former employees’ individual arbitration claims. The judge involved in the ruling argued the Federal Arbitration Act does not allow an arbitrator to conduct class arbitrations unless the parties agree to participate, and “… the absence of any reference to class arbitration in an agreement meant it was not agreed upon…”

The company had tried to compel arbitration on an individual employee basis, which was partially granted by a federal court. That ruling and subsequent other rulings were overturned and ultimately, the Third Circuit determined if class arbitration is not specified in an employment contract, a court cannot impose arbitration.


The debate concerning the value of arbitration and the whether or not it denies employees’ rights continues to rage and is unlikely to end any time soon.