On May 21, 2018, the United States Supreme Court, in a landmark employment law decision, held that arbitration agreements providing for individualized arbitration proceedings to resolve labor disputes must be enforced. Epic Systems Corp. v. Lewis, 584 U.S. __ (2018). Justice Gorsuch wrote the majority opinion, in which Justices Roberts, Thomas, Alito and Kennedy joined. The case involved employers and employees who entered into employment contracts providing for individualized arbitration proceedings to resolve employment law disputes. The employees nonetheless sought to litigate Fair Labor Standards Act (“FLSA”) wage and hour claims through class or collective actions in federal court. The Federal Arbitration Act (“FAA”) generally requires courts to enforce arbitration agreements according to their terms unless they are invalid under contract law. However, the employees argued that the FAA’s savings clause removes the requirements to enforce arbitration agreements if the arbitration agreement violates some other federal law; and that by requiring individualized arbitration proceedings to resolve wage and hour claims, which would preclude employees’ rights to litigate labor claims on a class-wide or collective basis, the arbitration agreements violated the National Labor Relations Act (“NLRA”) and therefore are invalid and unenforceable. The majority rejected the employees’ arguments, stating that the employment law arbitration agreements “must be enforced” and that “neither the Arbitration Act’s savings clause nor the NLRA suggest otherwise.”
Justice Ginsburg wrote a scathing and passionate dissenting opinion, in which Justices Breyer, Sotomayor, and Kagan joined. Justice Ginsburg stated that “the Court’s decision is egregiously wrong.” The FAA should not permit employers to require employees, as a condition of employment, to “go it alone” whenever seeking redress for commonly experienced wage loss, which contravenes the explicit statutory right of employees under the NLRA to engage in concerted activities for their mutual aid and protection. The majority decision subordinates labor legislation intended to protect employees from unlawful labor practices to the Arbitration Act, and “ignores the destructive consequences of diminishing the right of employees to band together in confronting an employer.” The dissenting opinion is predicated in part on the idea that individual wage and hour claims are often of a relatively inconsequential magnitude, while class-wide or collective litigation of wage and hour claims may pose catastrophic liability for employers.
It should also be noted that while the majority opinion did not reach the issue of the enforceability, or the lack thereof, of employment arbitration agreements purporting to require individualized arbitration of unlawful employment discrimination, workplace harassment or retaliation claims, Justice Ginsburg saw fit to include in her dissenting opinion the cautionary statement that, “It would be grossly exorbitant to read the FAA to devastate Title VII of the Civil Rights Act of 1964, 42 U.S.C. Sec. 2000e et seq., and other laws enacted to eliminate, root and branch, class-based employment discrimination.”