A Win For Employers
A recent United States Supreme Court decision has strengthened one of an employer’s most valuable tools for resolving conflicts with employees. In a 5-4 decision in Epic Systems Corp. v. Lewis, the court determined that class or collective action waivers in arbitration agreements between employers and employees are enforceable.
This much anticipated decision resolves a split in the federal circuits and is generally viewed as a victory for employers. The case removes the previous ambiguity about whether arbitration clauses in employment contracts precluding an employee from joining a class action are enforceable.
As a result of this decision, employers should consider adding arbitration clauses with collective/class action waivers to their standard employee agreements. The employment law department at Parsons Behle & Latimer would be happy to advise your organization to determine how best to revise your employment agreements in light of the Epic Systems decision – case details are listed below.
Epic Systems Corp. v. Lewis: In this case, the employees argued that the Federal Arbitration Act’s (FAA) “savings clause” removed a court’s usual obligation to enforce an arbitration agreement if the agreement violates some other law. The employees then argued that the provision barring collective or class action lawsuits violated a federal law –the National Labor Relations Act (NLRA).
The Supreme Court rejected both arguments. The Court held that under the FAA, arbitration agreements requiring individualized proceedings (as opposed to class actions) are enforceable. The Court further held that the NLRA is focused on employee rights to unionize and engage in collective bargaining, and that it does not protect an employee’s rights in the context of class action waivers in arbitration agreements.
