In the last few years, the U.S. Supreme Court has issued sweeping decisions enforcing class action waivers contained in arbitration agreements, finding enforcement mandated under the preemptive force of the Federal Arbitration Act (FAA). For employers in the financial services industry, however, the interpretation by the Financial Industry Regulatory Authority (FINRA) of its own rules has loomed over the heads of broker-dealers that sought to maintain and enforce class and collective action waivers of employee claims.
FINRA’s board of governors issued a decision in April finding that a broker-dealer’s inclusion of class action waivers in customer agreements violates FINRA rules, and that enforcement of those rules is not preempted by the FAA. Department of Enforcement v. Charles Schwab & Co., Inc. This decision leaves open the question of the propriety of class action waivers contained in arbitration agreements with employees.
