Class Action Waiver Employment Agreement Sample: Understanding Its Importance and Legal Implications
Class action lawsuits filed on behalf of employees have become increasingly common in recent years. These lawsuits often involve claims related to wage and hour violations, discrimination, harassment, or other employment-related issues. However, employers have found a way to avoid such lawsuits by incorporating class action waiver provisions in employment agreements. But what is a class action waiver employment agreement, and what are its implications?
What is a Class Action Waiver Employment Agreement?
A class action waiver employment agreement is a contractual provision that prevents employees from filing or participating in a class action lawsuit against their employer. Instead, the agreement requires employees to resolve disputes individually through arbitration. This means that employees cannot join together to file a collective lawsuit, and they must resolve disputes one by one, usually through a private arbitrator.
Why Employers Use Class Action Waiver Employment Agreements
Employers use class action waiver employment agreements as a way to avoid the expense and uncertainty of class action lawsuits. Class action lawsuits can be expensive and time-consuming, often requiring significant resources to defend against. Employers may also want to avoid the negative publicity that comes with such lawsuits and protect themselves from potentially large collective damages.
Legal Implications of Class Action Waiver Employment Agreements
Class action waiver employment agreements are not without controversy. Some argue that they undermine employees` rights to collectively protect their interests and hold employers accountable for illegal conduct. Courts have addressed these concerns and have issued conflicting opinions on the enforceability of such agreements.
In 2018, the US Supreme Court, in Epic Systems Corp. v. Lewis, ruled that class action waivers in employment agreements are enforceable under the Federal Arbitration Act. This decision upheld the validity of such agreements and prevented employees from suing their employers in collective actions.
However, state laws may provide additional protections for employees. Some states, like California, have enacted laws that prohibit class action waivers in certain circumstances. Employers should consult with legal counsel to understand the implications of class action waivers in their specific jurisdiction.
Sample Class Action Waiver Employment Agreement
Here is a sample class action waiver employment agreement provision:
“I understand and agree that any dispute or claim arising out of or relating to my employment or termination of employment, including but not limited to claims of discrimination, harassment, or wage and hour violations, must be resolved through individual arbitration. I am waiving my right to participate in any class, collective, or representative proceeding against the company with respect to such claims.”
Conclusion
Class action waiver employment agreements are becoming more common in employment contracts. Employers use them as a way to protect themselves from potentially costly and time-consuming class action lawsuits. However, these agreements have legal implications, and employees should understand the implications before signing one. As a best practice, both employers and employees should consult with legal counsel before entering into any employment agreements that contain class action waiver provisions.