Arbitration developments: SCOTUS interprets pro-employee, pro-employer cases

Some of you use arbitration to resolve workplace disputes with your employees or are considering it. Here are two recent cases from the U.S. Supreme Court (SCOTUS) interpreting the Federal Arbitration Act (FAA) and/or its amendments. One is pro-employee, and the other is pro-employer.

Pro-employee decision

This case involves a fast-food franchise that required its employees to arbitrate any employment-related dispute. An employee brought a lawsuit under the Fair Labor Standards Act (FLSA) seeking overtime on the employee’s behalf and other similarly situated employees. The lawsuit proceeded until the employer did what I imagine was a slap to its corporate forehead and said, “Wait, we use arbitration agreements with our employees, so this lawsuit needs to be decided by an arbitrator!”

The employer asked the trial court to submit the claim to arbitration, and the issue that found its way to SCOTUS was this: Did the employer waive, or give up, its right to arbitration by saying nothing about its right at the start and engaging in litigation, such as exchanging evidence, in the trial court? The appeals court ruled the employees, who didn’t want to go to arbitration, must prove they were prejudiced by the employer’s delay. SCOTUS thought otherwise.