“Should employees and employers be allowed to agree that any disputes between them will be resolved through one-on-one arbitration? Or should employees always be permitted to bring their claims in class or collective actions, no matter what they agreed with their employers?”
These are the questions that the U.S. Supreme Court answered in the decision published May 21, 2018 in the consolidated cases of Epic Systems Corporations v. Jacob Lewis, Ernest & Young LLP et al v. Stephen Morris, et al, and National Labor Relations Board v. Murphy Oil, USA, Inc, et al. 584 US ______ (2018). Simply stated, the Decision answered YES to the first question and NO to the second, so that employers can require workers to settle employment disputes through individual arbitration rather than joining collectively to press their complaints. Justice Gorsuch authored the Decision for the majority Justice Ginsburg inked a dissent which called the Decision “egregiously wrong”.
Simply stated, the Decision in these consolidated cases resolves the dispute under the Federal Arbitration Act as to whether language in arbitration agreements which mandates individualized claims over concerted or class claims, is enforceable in light of such other federal statutes as the National Labor Relations Act which embraces the concept of collective action to protect individual employees. Thus, an arbitration clause in an employment agreement which requires individual arbitration of worker’s claims is enforceable. The arbitration agreements with class action waivers effectively preclude class actions by workers.
The practical effect of this decision is that it will be more difficult for individual employees who have an employment agreement with such an arbitration clause to challenge employment practices which have limited individual value. Prior to this decision, this limitation could be overcome by asserting class status and asserting the claims on a collective basis which would have greater value and thus worth litigation.
Going forward, employers can require labor and wage disputes to be decided individually, and not allow workers to collectively bring class action lawsuits against their employers. For employees, if there is an employment agreement with an arbitration provision with contains such language, they need to understand that in the event of a dispute they will have to arbitrate it on their own.