The Ninth Circuit’s recent ruling in Avery v. TEKsystems, Inc. (9th Cir. 2026) 165 F.4th 1219, invalidating an arbitration agreement rolled out during pending litigation emphasizes the importance of clear communication with putative class member employees and what employers must avoid should they choose to roll out arbitration agreements amidst an ongoing lawsuit.
Background
In Avery, former recruiter employees of TEKsystems, Inc. (“TEK”) filed a putative class action alleging that recruiter employees had been misclassified as exempt employees. TEK removed the case to federal court and the parties then engaged in discovery, motion practice, and class certification briefings for over a year.
On December 19, 2023, right before the holidays and while the litigation was still ongoing, TEK rolled out its arbitration agreement which included a class and collective actions waiver via two emails.
The first December 19 email, sent to all TEK employees, attached the arbitration agreement and stated that employees who remained employed after January 1, 2024, would be deemed to have accepted the arbitration agreement—essentially binding employees through inaction. Additionally, the email contained statements explaining that the company was implementing arbitration agreements because in the company’s experience, “litigation in court – particularly class and collective actions – are wasteful, inefficient means for resolving disputes, and tend to enrich only attorneys rather than the...
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