Last week, the U.S. Supreme Court heard oral arguments on a case involving the use of mandatory arbitration agreements that include waivers of the right to arbitrate claims as a class. American Express Co. v. Italian Colors Restaurant involves a commercial antitrust dispute between a retailer and the credit card company. The restaurant contends that its inability to pursue claims as a class prevents it from having an effective remedy due to the small amounts at issue for each retailer, and the enormous cost of individually pursuing such claims. American Express contends that the Federal Arbitration Act allows parties to elect arbitration, including agreeing upon a waiver of class arbitration rights.

This case could have a significant impact on employers. Mandatory arbitration agreements used in the employment context typically contain similar waivers of class or collective action arbitration. A finding that the FAA allows such waivers would bolster employers' position with regard to their use in employment agreements.

The current case before the Court does not address other legal arguments unique to the employment relationship. In its D.R. Horton decision, the National Labor Relations Board concluded last year that class action waivers in employment agreements violate the NLRA because they limit the rights of employees to act collectively to address issues in the workplace. This case is currently under review by the Fifth Circuit Court of Appeals. The decision has been further complicated by questions over the NLRB's quorum at the time the D.R. Horton ruling was made.

The use of class action waivers in employment arbitration agreements may reach the Supreme Court in the next several years. The Court's decision in the current commercial case may signal the likely outcome of such eventual appeal.