As we’ve written about (here), the United States Supreme Court has held that class action waivers are enforceable, according to federal law, in most contexts. Lower courts, including Massachusetts state and federal ones, are bound to follow that guidance. Accordingly, Massachusetts employees who have signed class action waivers must overcome a high hurdle in order to bring or participate in a class claim. This analysis, however, assumes the applicability of the Federal Arbitration Act (“FAA”), meaning the result may be different if the FAA does not apply. The FAA does not apply to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1. In 2001, the United States Supreme Court limited the “any other class” category to transportation workers. Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001) On July 17, 2020, the First Circuit Court of Appeals was asked to decide this very issue: are class action waivers enforceable outside the FAA context?

Bernard Waithaka was a so-called “last mile” driver for Amazon.com, Inc. Amazon contracts with these “last mile” drivers to provide delivery services through the last mile of the order. Mr. Waithaka filed a class action suit against Amazon, claiming that he, and the other “last mile” drivers were misclassified as independent contractors. Amazon responded, claiming that he could not bring that claim on a class basis as he had agreed to the following:

b) TO THE EXTENT PERMITTED BY LAW, THE PARTIES AGREE THAT ANY DISPUTE RESOLUTION PROCEEDINGS WILL BE CONDUCTED ONLY ON AN INDIVIDUAL BASIS AND NOT ON A CLASS OR COLLECTIVE BASIS.

The First Circuit held that Mr. Waithika fell within an exception to the FAA provided for certain transportation workers. Read the opinion here. That meant Mr. Waithika could attack the agreement on multiple grounds, as opposed to the very limited ones for agreements that are governed by the FAA. One of the options afforded to Mr. Waithika was to seek to invalidate the waiver on the grounds that enforcing it would violate Massachusetts public policy. The Court agreed with this argument, holding that Massachusetts has a strong public policy in allowing wage-and-hour claims to proceed on a class basis, and that enforcing the waiver would violate that policy.

The Federal Arbitration Act heavily encourages arbitration and the enforceability of class action waivers. In doing so, the FAA essentially preempts any state and local laws or rules that make enforcing those agreements more difficult. Going forward, the first question to answer for employees who want to bring class claims but have signed a waiver saying they won’t is: does the FAA apply? If yes, the options are pretty slim. If no, they are much more favorable to employees.