- With a 5-4 vote, the U.S. Supreme Court has upheld an employer's right to require that workers arbitrate disputes individually, waiving their right to class or collective actions (Epic Systems Corp. v. Lewis, No. 16-285). According to the May 21 opinion, written by Justice Neil Gorsuch, the Federal Arbitration Act requires that arbitration agreements "must be enforced, and neither the Arbitration Act's saving clause nor the [National Labor Relations Act] suggests otherwise."
- The issue came to the nation’s highest court in three cases that were later consolidated. In one case, the National Labor Relations Board (then having a left-leaning majority) found that such agreements violate employees' National Labor Relations Act right to engage in concerted action for mutual aid or protection. Employers, however, argued that another federal law, the Federal Arbitration Act, provides that arbitration agreements are valid, irrevocable and enforceable. Federal appellate courts disagreed with each other when faced with the issue, setting the stage for the Supreme Court to step in.
- The U.S. solicitor general’s office, which originally filed an employee-friendly brief on behalf of the NLRB, changed its position after the administration change and later filed a brief in which it supported the employers.
Although this outcome was largely expected, it's good news for employers. Businesses can continue requiring that workers agree to arbitration claims individually — something that has the potential to save companies millions, as collective action awards can be quite large.
The use of these waivers has exploded in recent years. The Economic Policy Institute has estimated that mandatory arbitration clauses now cover 60.1 million workers nationwide, and 24.7 million of them include class action waivers.
Critics, however, say the waivers infringe on workers' rights, and Craig Becker, general counsel for the AFL-CIO and a former NLRB Board member, told The Atlantic that this outcome could cripple private enforcement of various federal employment laws. “Every well-counseled employer will require that its employees sign waiver agreements,” he said. In a dissenting opinion, Justice Ruth Bader Ginsberg called the majority holding "egregiously wrong" for similar concerns over whether it would even be worth it for individuals to pursue claims.