BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

High court’s class action ruling could trigger employment cover expansion

High court’s class action ruling could trigger employment cover expansion

Insurers may be more willing to cover wage and hour employment risks following Monday’s U.S. Supreme Court decision that allows companies to require employees to sign away their ability to bring class action claims against management, an employment law attorney said.

The ruling eliminates confusion over the validity of such agreements and could encourage more employers to adopt them, according to legal analysts.

In National Labor Relations Board v. Murphy Oil USA, Epic Systems Corp. v. Lewis, and Ernst & Young v. Morris, the justices sided 5-4 with a growing practice by companies to compel workers to sign arbitration agreements waiving their right to bring class action claims on issues such as overtime wages or gender-based pay disparities, either in court or before private arbitrators.

The NLRB ruled in 2012 that it is a violation of federal labor law to require employees to sign arbitration agreements that prevent them from joining together to pursue employment-related legal claims in any forum, whether in arbitration or in court.

The Trump administration reversed the government’s stance in the case, siding with the companies after former President Barack Obama’s administration had supported an NLRB decision invalidating such employment agreements.

In her dissenting opinion, Judge Ruth Bader Ginsburg said the high court’s decision was “egregiously wrong.”

Dallas-based attorney Ron Chapman, a shareholder with Ogletree Deakins Nash Smoak & Stewart P.C., said the decision “means employers can eliminate their single biggest employment law risk.”

Currently, most insurance companies do not cover wage and hour disputes in employment practices liability insurance policies, he said.

“Now that the court has ruled in this way, I can see more insurance companies offering to cover at least the defense of wage and hour disputes if the (insured) can show that it has an arbitration program with class action waiver in place during the underwriting process,” he said.

Mr. Chapman added that “the risk just got a lot lower and therefore less expensive which is going to make the insurance companies more willing to cover it. So, the cost is going to come down and employers may want those types of policies.”

The Economic Policy Institute found that 56.2% of private-sector nonunion employees are subject to mandatory employment arbitration procedures, according to a 2017 report.

Extrapolating to the overall workforce, the report said, “this means that 60.1 million American workers no longer have access to the courts to protect their legal employment rights and instead must go to arbitration.”

In light of the court’s decision, Mr. Chapman said more employers are likely to adopt arbitration programs.

“As of today, I would estimate or characterize the use of arbitration programs as fairly common,” he said. “Three months from now, six months from now, once the business community has digested today’s opinion and decided how it affects them, I would expect the use of arbitration agreements to be downright prevalent.”

Lauren Novak, a partner with Schiff Hardin L.L.P. in Chicago, said in a statement that “the decision allows the countless employers that have spent time and effort defending their employment agreements before the National Labor Relations Board and in the appellate courts to breathe a collective sigh of relief.”

Andrew Pincus, a partner with Mayer Brown International L.L.P. in Washington, D.C., said the ruling “eliminates some confusion that resulted from the NLRB’s 2012 decision.”

“But I think this indicates that arbitration agreements in the employment world stand on the same footing as arbitration agreements in the customer context or between businesses and all other contexts,” he said.

Adam T. Klein, deputy managing partner with Outten & Golden L.L.P. in New York who represents employees, disagreed with the ruling, saying it puts employers and employees in “another forum for a lot of money in lieu of what is essentially a largely free judicial system that works quite well.”

“We think it was wrongly decided, but it is the Supreme Court’s right to tell us what the law of the land is, so I guess we don’t have a choice,” he said.






Read Next

  • Class action settlement values down in 2017: Cornerstone

    A large percentage of settlements under $5 million, combined with the absence of any settlement more than $250 million, led to a dramatic drop in the value of class action settlements in 2017 to $1.5 billion from $6.1 billion in 2016, says a report issued Wednesday by Cornerstone Research Inc.