What Is a Class Action Waiver?

A class action waiver is a contract term in which you agree not to bring or join a class action against the company, and to pursue any dispute individually instead. It usually appears alongside an arbitration clause in terms of service, cardholder agreements, phone plans and employment contracts.

Why it matters to you

A class action waiver can explain why some companies rarely face class settlements, and why some customers are left out of a settlement that covers others. If you agreed to a valid waiver, you may be excluded from the class or blocked from participating in a lawsuit, and your path for a dispute may be individual arbitration instead.

How enforceable are they?

In the United States, the Supreme Court held in AT&T Mobility v. Concepcion (2011) that the Federal Arbitration Act generally preempts state rules that would invalidate class waivers in arbitration agreements. Since then, these waivers have been widely enforced. Still, they are not automatic:

• ✓A court may find you never validly agreed to the terms, for example if they were not reasonably presented
• ✓Some claims or categories of workers may fall outside the agreement
• ✓Some settlements still include people covered by waivers, if the company agrees
• ✓Rules differ outside the US, including in Canada and the UK

A simple example

A subscription service updates its terms to require individual arbitration and waive class actions. A later settlement defines the class as customers who signed up before the change, because later customers agreed to the waiver. Two people with the same complaint end up with different options.

Waivers also show up in employment. Many employers ask workers to sign arbitration agreements with class and collective action waivers as a condition of the job. The Supreme Court has upheld these in the employment setting as well, though some state-law claims and certain categories of workers may be treated differently. A lawyer can tell you how a particular agreement applies.

Related terms

Class waivers almost always come with an arbitration clause. When many people bring individual arbitrations at once, that is mass arbitration. For the basics of class cases, see what is a class action.

Even companies with waivers do settle class cases. SettleScout lets you check the brands you use against open settlements on our brands page and in the app.