Class Action Waiver

A contractual provision, often bundled with an arbitration clause, prohibiting employees from bringing class or collective claims against the employer. The Supreme Court's Epic Systems Corp. v. Lewis decision confirmed the enforceability of class action waivers in employment arbitration agreements under the Federal Arbitration Act, significantly narrowing the available plaintiff pool in funded employment cases. The presence of a class action waiver is often a threshold disqualifier for litigation finance consideration unless state-law exceptions or non-waivable statutory rights create viable workarounds.

Because Epic Systems confirmed the enforceability of class action waivers in employment arbitration agreements, funders treat a valid waiver as functionally foreclosing aggregate recovery unless a state-law carve-out or a non-waivable statutory right — such as California's PAGA — creates a viable workaround. Funders specifically look for that kind of carve-out before declining a matter outright, since it can be the difference between a fundable representative action and an unfundable individual arbitration.