In a decisive victory for employers, the United States Supreme Court held that, under the Federal Arbitration Act, an arbitration agreement can prohibit an individual from commencing or participating in a class action. The California Supreme Court had established a rule that an employment arbitration agreement was not enforceable if it waived an individual’s right to file a class action. The U.S. Supreme Court, in a 5-4 decision, held that state laws cannot interfere with an arbitration agreement’s elimination of the class action mechanism to resolve disputes. Employers can use this ruling to essentially eliminate one of the biggest litigation threats facing their business – the wage-and-hour class action.
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