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Supreme Court tackles arbitration agreements

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in Employment Law,Human Resources

One of the first cases the U.S. Supreme Court heard in its 2015-2016 term could have important implications for employers that require arbitration to settle workplace disputes.

Arguments in DirecTV, Inc. v. Imburgia took place on Oct. 6, opening day for the new Supreme Court term. The case involves a customer, Amy Imburgia, who filed a class-action suit against DirecTV over termination fees.

DirecTV tried to force arbitration. Prior to a 2011 Supreme Court decision (AT&T Mobility LLC v. Concepcion), most arbitration agreements were unenforceable under state law. However, Imburgia filed her class-action lawsuit before the court decided Concepcion.

The question before the Supreme Court: whether the Federal Arbitration Act covers arbitration agreements that follow state law.

What does that have to do with employment law? A lot, said attorney Michael Droke of the Dorsey and Whitney law firm in Seattle.

“Regardless of how the court rules, this decision will apply to all arbitration agreements,” he said. Employers might have to conduct a wholesale overhaul of their arbitration agreements, at considerable cost.

“If Imburgia wins, any company using arbitration clauses will be required to review the agreement to comply with state laws,” Droke said. “This would require companies either to ditch their arbitration agreement, create one form that complies with the most-restrictive laws across the United States, or have a piecemeal approach with multiple agreements.”

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