- May 22, 2018
On Monday, the United States Supreme Court upheld employers’ rights to include and enforce class-action waivers in arbitration agreements with their employees. Employers’ use of arbitration agreements has become more prevalent in recent years, and the agreements often require that employees arbitrate any disputes in individualized proceedings in order to avoid any class or collective action lawsuit. Arbitration proceedings are usually less costly and present less risk for companies than traditional court proceedings, and avoiding class action suits aids in the prevention of large payouts for class awards.
In Epic Systems Corp. v. Lewis, employees challenged the use of class waivers, arguing that they violated the National Labor Relations Act, which guarantees workers the right to join forces in “mutual aid and protection.” However, the majority rejected that argument, finding that class waivers in employment arbitration agreements may be enforced based upon federal law favoring arbitration and court precedent. The majority left it instead to policymakers to legislate any alteration to existing law.
The ruling is undisputedly a major win for employers, including potentially affecting an estimated twenty-five million employment contracts and decreasing the likelihood of often costly class-action litigation. For assistance in reviewing your current employment agreements or in drafting agreements to take advantage of beneficial arbitration provisions, please contact Danielle Gould at 312-840-7070, or Alex Marks at 312-840-7022.