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WASHINGTON The U.S. Supreme Court on Friday
agreed to consider whether companies can head off costly class
action lawsuits by forcing employees to give up their right to
pursue work-related legal claims in court as a group.
The justices took up appeals of three lower court rulings,
including one involving global professional services giant Ernst
& Young, that dealt with the legality of agreements
signed by workers requiring them to arbitrate disputes with
their employers individually rather bring class action lawsuits
with their coworkers.
At stake in the consolidated case is the future of the
so-called class-action waiver, which employers have increasingly
required employees to sign as part of their arbitration
agreements to guard against the rising tide of worker lawsuits
seeking unpaid wages.
Many companies say that resolving workplace disputes through
arbitration with individual employees is a speedy and
cost-effective alternative to class action litigation that can
result in large damages awards by juries and is harder for
businesses to fight than cases brought by individual plaintiffs.
Nearly 40 percent of employers reported using such waivers
in their employee arbitration agreements in 2015, up from 16
percent in 2012, according to a survey conducted by the law firm
Carlton Fields Jorden Burt.
But workers have fought back against the practice, arguing
that the cost of pursuing their cases individually in
arbitration is prohibitively expensive. The prospect of winning
a large damages award in a class action can be the only way for
workers to find lawyers to take their cases, they contend.
Dozens of companies, including Bank of America Corp,
Citigroup Inc and Jack in the Box Inc, have faced
challenges by employees trying to invalidate class action
Most courts that have considered these cases have upheld the
waivers. But employers could no longer count on the waivers
being enforced nationwide following a pair of appeals court
rulings handed down in 2016.
The Chicago-based 7th U.S. Circuit Court of Appeals and the
San Francisco-based 9th Circuit found that class-action waivers
are prohibited by a law protecting workers’ rights to act
together. Those rulings clashed with decisions by three other
federal appeals courts that found the waivers must be enforced.
The Supreme Court will review the 9th Circuit’s decision
involving Ernst & Young and the 7th Circuit’s ruling involving
Epic Systems Corp. It will also consider the New Orleans-based
5th Circuit’s judgment enforcing Murphy Oil USA Inc’s waiver,
which was challenged by the National Labor Relations Board.
The cases are Epic Systems v. Lewis, 16-285; Ernst & Young
v. Morris, 16-300; and NLRB v. Murphy Oil, 16-307; all at the
U.S. Supreme Court.
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