Due to a string of U.S. Supreme Court decisions in recent years favoring arbitration, less and less employment disputes may be litigated in court as employers implement new or revised arbitration terms in their employment agreements. Most recently, in June 2013, the Supreme Court held that courts cannot invalidate arbitration agreements which waive class actions unless there is an express congressional statement that class-action proceedings are so necessary to a federal claim as to preempt the Federal Arbitration Act (FAA).

The Supreme Court's reasoning centered around the principle that arbitration is a matter of contract, and the FAA requires courts to "rigorously enforce" arbitration agreements according to their terms. Appellate courts are also rejecting the National Labor Relations Board's 2012 analysis that class action waivers violate the National Labor Relations Act. This includes the Ninth Circuit most recently in August 2013, which many consider the most employee-friendly court of appeals.

Thus, employers can ensure that they stay out of court for nearly all employee disputes, and avoid having to defend against class and collective action complaints. In addition to killing possible class and collective actions, employers have the power to design the arbitration procedure for covered disputes. For instance, employers can require the arbitration and any award to be confidential, put restrictions on the amount of discovery permitted, and with appropriate notice can amend or terminate arbitration provisions at any time.

Employers should consider consulting with counsel regarding the pros and cons of employee arbitration agreements including ones that contain class- and collective-action waivers to determine if one should be implemented or revised.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.