In recognition of the benefits of arbitration, “the promise of quicker, more informal, and often cheaper resolutions for everyone involved,” as Justice Gorsuch put it, the decision contains important implications for drafting or updating arbitration clauses. The decision reiterates that employers may generally fix the procedures to govern arbitration in the terms of the arbitration agreement with the expectation that they will be upheld. Guidance can be drawn from the three agreements in these cases which the court held enforceable, each with varying terms. For example, one of the arbitration agreements gave the employee the option to choose the arbitrator, whereas another did not. Employers will continue to have latitude to customize arbitration agreements in ways appropriate for their business on the heels of the Epic Systems decision. Yet for many employers, the decision raises a longstanding question that has garnered increased attention recently—is arbitration right for your company? In the wake of Epic Systems, some employers are reevaluating whether arbitration makes sense for their particular circumstances.
For employers that are interested in more fully developing an arbitration program, the recent ruling leaves them with a variety of issues to consider.
- What procedures will govern the proceeding?
- What jurisdiction’s law will govern?
- Where will disputes be adjudicated?
- Does law in a given jurisdiction require the employer to pay the costs of arbitration?
- Could a plaintiff argue that terms are procedurally or substantively unconscionable?
- Is class arbitration prohibited?
- When must claims be filed?
- What evidentiary guidelines will apply?
- How is cost shifting addressed?
- Is arbitration voluntary or mandatory?
These factors will come into greater focus for employers as the Epic Systems ruling reverberates through the lower courts. While there are many issues to evaluate, the Supreme Court’s ruling assures employers of one critical point: arbitration agreements with class action waivers remain a useful option for employers seeking to minimize litigation risk exposure.