Sixth Circuit Rules that Revised Arbitration Agreement did not Apply to Pending Class Action

A call center employee had signed a contract with the employer to arbitrate any employment disputes, but the arbitration contract only covered individual claims and not class actions. In January 2012, he filed a class action wage and hour complaint alleging that his employer failed to pay its employees for time spent logging in and out of their phone systems each work day. 

In late 2012, with the class action lawsuit still in progress, he re-applied to work in the call center. The employee was hired in January, 2013 and asked to sign a new arbitration contract which covered class actions. Based on the new arbitration contract, the employer moved to arbitrate the pending class action. The Sixth Circuit Court of Appeals found that the text of the amended contract did not apply to pending claims. In doing so, the Court examined the prospective language in the contract which included the word "arise" to describe any potential disputes. The Court also considered evidence regarding the intent of the parties, which failed to show either side intended the arbitration contract to cover existing claims.

Although, in this case, the post-suit arbitration contract was found to be unenforceable, the Court's analysis suggests that such contracts may be enforceable if drafted correctly. To avoid this issue altogether, employers should review their existing arbitration contracts to make sure they cover both individual and class claims.