On May 21, 2018, the Supreme Court of the United States settled the contentious class action waiver issue that has riled courts for the past six years. In a 5-4 opinion, the Court upheld class action waivers in arbitration agreements. Relying heavily on the text of the Federal Arbitration Act (FAA) and “a congressional command requiring us to enforce, not override, the terms of the arbitration agreements before us,” the Court ruled that the FAA instructs “federal courts to enforce arbitration agreements according to their terms—including terms providing for individualized proceedings.” The Court also reasoned that neither the FAA’s savings clause nor the National Labor Relations Act (NLRA) contravenes this conclusion. Epic Systems Corporation v. Lewis, Supreme Court of the United States, Nos. 16–285, 16–300, 16–307 (May 21, 2018).
This is great news for employers but it is not a panacea. Employers should focus on paying employees in accordance with the law and allowing breaks, rest periods, leaves of absence, compliance with ADA and worker’s compensation issues. All State and Federal labor laws remain in play. This decision only opens the door to require the use of Arbitration to settle legal disputes (at your expense). It also reduces the use of class action law suits started by a dispute with an individual.
We will be discussing this with some of our customers in the near future. An Arbitration Agreement is not for all employers and may actually create costs you are not ready to pay, so we must be careful in the application of this policy. I am sure we will be hearing more about this judgement in the days and weeks ahead.