Batching A Growing Response To Mass Wage Arbitrations

Types : In the News

Workers have responded to employers’ arbitration requirements in wage and hour disputes by filing thousands of simultaneous arbitration demands, and now employers are rewriting pacts so that only what are known as batches of those demands proceed at a time, raising questions about efficiency and due process, attorneys said.

Predispute arbitration agreements, including those with class and collective action waivers, have become a common way to keep wage and hour claims out of court. That has led to workers filing mass arbitration demands, sometimes tens of thousands of simultaneous filings.

To deal with or discourage those, employers over the past few years have been adding mass arbitration protocols to arbitration agreements. One increasingly popular protocol is batching, in which an employer proceeds to arbitration with only a limited number of mass demands, sometimes containing bellwether, or representative, cases, and puts the rest on hold while pursuing a global settlement.

Management-side attorneys say batching is one of the necessary ways of dealing with mass arbitrations, which can have very high upfront costs for employers.

Worker-side attorneys say mass arbitrations are a creature of the contracting choices employers make and that batching demands can delay claims for years.

Federal courts have taken a pact-by-pact approach to determining whether arbitration agreements containing batching protocols are conscionable. Some of these rulings have come in the consumer context, but employment attorneys said they are instructive.

The most significant ruling came from the Ninth Circuit, where a panel held in 2024 in Skot Heckman et al. v. Live Nation Entertainment Inc. et al. that the company’s method of using bellwether cases from batches was not permissible. The U.S. Supreme Court declined to review the decision.

More recently, on Sept. 8, a California federal judge denied a motion to compel arbitration in another consumer case, finding that a company’s mass arbitration provision “unconscionably chills” claimants from making claims and interferes with their ability to obtain counsel.

However, other courts have ruled in favor of companies, especially when they have shown they included in arbitration agreements certain steps when batching that could be seen as consumer- or employee-friendly, according to Robert Day of management-side firm Montgomery McCracken Walker & Rhoads LLP.

“I honestly can’t say that there’s a bright-line rule here, but certainly one of the things the courts are concerned about in the batching context is the concept of, justice delayed is justice denied,” Day said. “There are things that companies can do, even in their batching provisions, that will help confirm for courts that that is not what the batching provision is there for.”

Those steps include tolling the statute of limitations, expanding the number of claims per batch as the process moves forward, handling batches concurrently, and allowing parties to opt out of arbitration after a certain point in the process, according to Day.

“Those are all values that show that the company cares about making sure that folks have their claims heard,” Day said.

“No one feature is the silver bullet,” he added. “Courts evaluate arbitration clauses holistically. They’re going to take into consideration all the procedural protections that you provide, to evaluate whether, especially in the batching context, there’s an undue delay.”