Class Action Waivers In Arbitration Agreements In Massachusetts

A flurry of new decisions from the Massachusetts Supreme Judicial Court (SJC) and the U.S. Supreme Court have approved the use of class action waivers in arbitration agreements. These decisions affirm that employers in Massachusetts can dramatically reduce their exposure to employment law class actions by adopting arbitration agreements that contain class action waivers.

In Massachusetts, employers may require employees to enter into arbitration agreements as a condition of employment (or as a condition of continued employment).1 These agreements mandate that employees resolve employment law disputes before an arbitrator rather than in court. Until recently, however, it had been unclear whether an arbitration agreement can waive an employee's ability to bring a claim as a class action (that is, a legal action filed by one person on behalf of many other similarly situated individuals). On one hand, the SJC ruled in 2009 that arbitration agreements could not ban class actions in cases where the statute under which the employees sought relief explicitly authorized the filing of class actions.2 Since many employment law statutes contain this type of language, some practitioners in Massachusetts assumed class action waivers in arbitration agreements would not be enforced in lawsuits involving these statutes. On the other hand, in 2011, the U.S. Supreme Court found in AT&T Mobility v. Concepcion that a similar state ruling in California was preempted by the federal arbitration...