Earlier today the Supreme Court announced its decision in Epic Systems Corp. v. Lewis, holding in a 5-4 split that arbitration agreements providing for individualized proceedings must be enforced. Arbitration provisions in employment contracts are quite common and often include language specifically limiting employees to individualized arbitration proceedings as opposed to class action proceedings or joint-arbitration.
Oral argument in this case was originally held back in October, where attorneys representing the employer’s interests argued that the Court’s decision in this case is dictated by the Federal Arbitration Act (FAA). Under the FAA, arbitration agreements “shall be valid, irrevocable, and enforceable.” They argued that because the FAA is so clear in its support for enforcing arbitration agreements as written, it could only yield when faced with an explicit contrary Congressional command. Arguing on behalf of the United States (which had originally sided with the employees before the change in the Administration), Deputy Solicitor General Jeffrey Wall stressed that the case was “at the heartland of the FAA” and “at best, at the periphery of the National Labor Relations Act (NLRA).” Section 7 of the NLRA provides workers with the right to band together to pursue an action, but once they arrive at a forum they are bound by the rules of that forum. If the forum is a courthouse, they are bound by class action rules. If the forum is the National Labor Relations Board, they are bound by the rules of the Board, which do not provide for class actions. Here, the forum is individual arbitration, which the employees themselves agreed to. Section 7 does not extend to dictate the rules of the forum, and therefore under the FAA the arbitration agreements providing for individualized proceedings must stand.
Attorneys representing the interests of employees argued that the impact of the NLRA is much greater. Section 7 of the NLRA provides employees with the right to engage in “other concerted activities for the purpose of…other mutual aid or protection.” Employees banding together to pursue legal claims is exactly the type of concerted activity the NLRA seeks to protect, and so an employer cannot bar an employee from bringing a collective action unless there is a different forum available to allow such an action. The FAA simply places arbitration agreements on the same footing as other contracts, and any provision that would strike down a contract would also strike down an arbitration agreement. Section 8 of the NLRA makes clear that contractual provisions that conflict with Section 7 are unlawful, so therefore the arbitration provisions prohibiting joint-action cannot stand.
Writing for the majority, Justice Gorsuch explained that while the policy behind enforcing individualized arbitration is debatable, under the Federal Arbitration Act Congress clearly instructed federal courts “to enforce arbitration agreements according to their terms—including terms providing for individualized proceedings.” For the NLRA to override the FAA, Congress would need to have shown a “clear and manifest” intention to displace one Act with another, and that was not shown here. Justice Gorsuch noted that class or collective actions were hardly known when the NLRA was adopted in 1935, and it is therefore unlikely that Congress wished to confer these rights in Section 7 of the NLRA through the use of the catchall term “other concerted activities for the purpose of…other mutual aid or protection.”
This decision once again shows the Court’s willingness to defer to arbitration agreements and uphold their enforceability. The decision will be welcomed by employers across the county who faced the potential of a commonly-used arbitration provision becoming suddenly unenforceable.
KMK Law articles and blog posts are intended to bring attention to developments in the law and are not intended as legal advice for any particular client or any particular situation. The laws/regulations and interpretations thereof are evolving and subject to change. Although we will attempt to update articles/blog posts for material changes, the article/post may not reflect changes in laws/regulations or guidance issued after the date the article/post was published. Please consult with counsel of your choice regarding any specific questions you may have.
ADVERTISING MATERIAL.
© 2021 Keating Muething & Klekamp PLL. All Rights Reserved
- Associate
Greg Robinson’s practice is concentrated in the area of labor and employment law. He has counseled clients on a wide array of employment matters, including wage and hour disputes, discrimination charges, and issues involving ...
Topics/Tags
Select- Labor & Employment Law
- Employment Law
- Coronavirus
- Labor Law
- Employee Benefits and Executive Compensation
- NLRB
- Discrimination
- Department of Labor
- IRS
- Sexual Orientation Discrimination
- Retirement
- Arbitration
- NLRA
- Employer Policies
- ERISA
- Race Discrimination
- Americans with Disabilities Act
- Accommodation
- ACA
- Affordable Car Act
- Litigation
- Social Media
- Reasonable Accommodation
- National Labor Relations Act
- National Labor Relations Board
- Employer Handbook
- Employment Litigation
- EEOC
- Wage & Hour
- 401(k)
- Federal Arbitration Act
- Paycheck Protection Program
- Title VII
- ADAAA
- Workplace Accommodations
- Sexual Harassment
- Employer Rules
- Unions
- Transgender Issues
- Technology
- Employment Settlement Agreements
- Securities Law
- Privacy
- FMLA
- Disability
- Workplace Violence
- Preventive Care Benefits
- Health Savings Account
- SECURE Act
- US Department of Labor Employee Benefits Security Administration
- Sixth Circuit
- Disability Discrimination
- Equal Employment Opportunity Commission
- Fair Labor Standards Act
- OSHA
- Overtime Pay
- Religion Discrimination
- Gender Identity Discrimination
- Posting Requirements
- Representative Election Regulations
- Class Action Litigation
- Disability Law
- E-Discovery
- Evidence
- Department of Justice
- Benefits
- Family and Medical Leave Act
- Environmental Law
- Privacy Laws
- Older Workers' Benefit Protection Act (OWBPA)
- Healthcare Reform
- Telecommuting
- Electronically Stored Information
- Affirmative Action
- Equal Opportunity Clause
- Compensable Time
- Pregnancy Discrimination
- Security Screening
- Supreme Court
- Occupational Safety and Health Administration
- E-Discovery Case Law
- Electronic Data Discovery
- ESI
- Return to Work
- Seniority Rights
- Unemployment Insurance Integrity Act
- American Medical Association
- Attendance Policy
- Classification
- Fair Minimum Wage
- Federal Minimum Wage
- Misclassification
- State Minimum Wage
- Wage Increase
- Confidentiality
- Disability Leave
- Equal Pay
- Genetic Information Discrimination
- Media Policy
- National Origin Discrimination
- Retaliation
- Social Media Content
- Taxation
- Employment Incentives
- HIRE Act
- Social Security Tax
- Antitrust
Recent Posts
- The Practical Employment Law Podcast: Termination Done Right - Part 1
- The Practical Employment Law Podcast: Welcome 2021 - 5 Things for Employers to Consider
- Congressional Proposal Extends Tax Credits to Companies Providing Paid Leave, but Allows Requirement to Expire
- The Practical Employment Law Podcast: EEOC Issues New Guidance on COVID-19 Vaccinations
- The Practical Employment Law Podcast: Non-Compete Agreements - Five Mistakes by Three Parties
- The Practical Employment Law Podcast: Employment At-Will – Myth or Reality?
- The Practical Employment Law Podcast: COVID-19 Immunity Laws
- The Practical Employment Law Podcast: Reductions in Force - Key Factors to Consider
- The Practical Employment Law Podcast
- 5 Things Employers Should Know About Military Leave