Supreme Court upholds employers’ right to require arbitration to settle workplace disputes

Supreme Court upholds employers’ right to require arbitration to settle workplace disputes

Labor Law

Per POLITICO Pro, the Supreme Court today upheld the right of employers to require employees to use private arbitration to resolve workplace disputes in a 5-4 decision.

The 5-4 decision, split along the usual ideological lines, upheld the right of employers to use mandatory arbitration clauses to block the filing of class-action lawsuits over workplace issues such as unpaid overtime. The majority rejected arguments that forcing those cases into private, individual arbitration violated federal labor law.

Here’s a good initial update from the Fisher Phillips legal blog.

To the relief of employers across the country, the Supreme Court today ruled in a 5-to-4 decision that class action waivers in employment arbitration agreements do not violate the National Labor Relations Act (NLRA) and are, in fact, enforceable under the Federal Arbitration Act (FAA). The decision in the three consolidated cases—Epic Systems Corporation v. Lewis; Ernst & Young, LLP v. Morris; and NLRB v. Murphy Oil USA, Inc.—maintains what had long been the status quo and halts the National Labor Relations Board’s (NLRB’s) crusade to invalidate mandatory class waivers. What do employers need to know about today’s monumental decision, and what adjustments can you make to capitalize on the Court’s ruling?

Unions and their allies blasted the Supreme Court for Monday’s decision allowing businesses to bar employees from filing class-action lawsuits.

“Five justices on the Supreme Court decided that it is acceptable for working people to have our legal rights taken away by corporations in order to keep our jobs,” AFL-CIO President Richard Trumka said in a written statement.

SEIU International President Mary Kay Henry agreed that the justices “made it more difficult, if not impossible, for working people to use our legal system to fight against unlawful employer policies.”

In a 5-4 ruling penned by Neil Gorsuch, the court ruled that employment contracts that forbade participation in class-action lawsuits, but instead referred such disputes to private arbitration, did not violate workers’ rights to engage in “concerted action” as defined in the 1935 National Labor Relations Act.

In a call with reporters, the AFL-CIO’s general counsel Craig Becker warned that the decision would have a “chilling effect” on employees seeking restitution for labor violations, and could “cripple enforcement of all the major employment laws,” including anti-discrimination and minimum-wage measures.

Labor advocates echoed the AFL-CIO’s fears, adding that because mandatory arbitration was typically conducted in secret, it could lead to fewer women coming forward with allegations about sexual harassment in the workplace. “The #MeToo movement has shown how crucial it is for workers to be able to voice their concerns together,” said Cathy Ruckelshaus, general counsel for the National Employment Law Project.

Monday’s ruling did not concern sexual harassment claims, and it applied only to mandatory arbitration clauses that forbade class-action lawsuits. But the ruling could well buttress legal arguments for mandatory arbitration clauses that forbid lawsuits brought by individuals, as sexual-harassment suits typically are. It would also appear to foreclose in most cases the option of litigation of future sexual-harassment violations through class actions.

The conservative justices argued that existing law did not allow the court to rule on the “respective merits of class actions and private arbitration.” Justice Ruth Bader Ginsburg called on Congress to update federal labor law to address the matter.

Rep. Bobby Scott (D-Va.), ranking member on the House Education and the Workforce committee, promised in a written statement that legislation would be introduced to “correct this injustice and strengthen workers’ rights to collective action.”

We will have additional updates on this as they become available.