U.S. Supreme Court Upholds Use of Class-Action Waivers in Employment Arbitration Agreements
The Supreme Court ruled this week that class-action waivers in arbitration agreements are lawful.FN1 The much-anticipated Epic Systems Corp. v. Lewis decision provides clarity to employers nationwide, who previously were required to navigate a patchwork of various state, federal, and agency rules concerning the use of class-action waivers in employment arbitration agreements.FN2
Many employers find that arbitration agreements are a useful means to control litigation costs and minimize the risk of runaway verdicts in employment claims. The Epic Systems confirms that employers may also avoid costly class- and collective- actions through the use of class-action waivers.
Campbell Litigation has worked with many companies over the years to prepare arbitration agreements for their employees. For companies interested in developing an employment arbitration program, the Epic Systems decision clarifies that employment arbitration waivers are lawful. Employers are encouraged to contact an attorney with Campbell Litigation to ensure their employment arbitration agreements are procedurally sound, and to discuss the pros and cons of arbitration agreements.
FN1: Epic Systems Corp. v. Lewis, --S. Ct. -- (2018), 2018 WL 2292444 (May 21, 2018), available at https://www.supremecourt.gov/opinions/17pdf/16-285_q8l1.pdf. Epic Systems was a 5-4 decision.
FN2: In 2012, the National Labor Relations Board (the “NLRB”) asserted for the first time that Section 7 of the National Labor Relations Act—which protects employees’ rights to join unions, bargain collectively, and engage in concerted activities for the mutual aid and protection of employees—nullified provisions requiring individualized employment arbitrations. D.R. Horton, Inc., 357 NLRB 2277. In recent years, the Sixth, Seventh, and Ninth Circuit Courts of Appeal (which together cover the entire West Coast and much of the Midwest) adopted the NLRB’s position. Lewis v. Epic Systems Corp., 823 F.3d 1147 (7th Cir. 2016); Morris v. Ernst & Young, LLP, 834 F.3d 975 (9th Cir. 2016); NLRB v. Alternative Entertainment, Inc., 858 F.3d 393 (6th Cir. 2017).