“Heads I win, tails you lose”: The End of Employers’ Exploitation of the Federal Arbitration Waiver Prejudice Requirement

On its face, an arbitration agreement suggests a straightforward process: should a dispute between the parties subject to the agreement arise, the dispute will be resolved through arbitration rather than litigation. But sometimes the parties do not follow this seemingly predetermined path. For example, many employers include mandatory, boilerplate arbitration agreements as conditions of employment. As is often the case, what happens when an employee sues her employer without knowledge of the contract’s arbitration clause? What if the employer allows the lawsuit to proceed for several months before it decides that it would fare better before an arbitrator? Must a court compel arbitration even if the plaintiff employee has spent considerable resources to pursue her claim in court? The Supreme Court of the United States addressed this question in Morgan v. Sundance. Plaintiff Robyn Morgan, an hourly Taco Bell employee, sued her employer’s parent corporation for withholding wages at her already low-wage job. After months of substantial litigation activity and to Ms. Morgan’s detriment, Sundance pulled out the pre-dispute arbitration agreement that Ms. Morgan was required to sign when hired