Employment Law Update: U.S. Supreme Court Upholds Employers' Contractual Rights to Require Individual Claims Via Arbitration

In a significant and far-reaching decision, the U.S. Supreme Court ruled that employment agreements that require the arbitration of certain employment claims brought by employees on an individual basis will be enforced as written.  Employees may not band together to form a quasi-class action against their employer in an arbitration setting if the employment agreement specifically prohibits it. 

Today's decision in the case of Epic Systems Corp. v. Lewis addressed an issue that has been unresolved in employment law for decades.  It also potentially affects every employer and every employee in the United States.

Brief Synopsis

This opinion covers legal arguments made in three separate but identical cases: Epic Systems Corp. v. Lewis, Ernst & Young, LLP v. Morris, and National Labor Relations Board v. Murphy Oil.  In each of the cases, the fact pattern is similar: between the employer and employee there existed an employment agreement, and that agreement required that employment related claims be subjected to arbitration on an individual basis, rather than a resolution through the courts. 

Justice Gorsuch, who authored the 5-4 opinion, framed the key questions in the case as follows:

"Should  employees  and  employers  be  allowed  to  agree  that any disputes between them will be resolved through one-on-one  arbitration?    Or  should  employees  always  be permitted  to  bring  their  claims  in  class  or  collective  ac-tions, no matter what they agreed with their employers?" 

Key Takeaways

  • Employees can still organize themselves into unions under the National Labor Relations Act.  Those unions can still collectively bargain - including to bargain that there be no arbitration clauses in their collective bargaining agreements;
  • Employment agreements that require the arbitration on an individual basis of certain employment claims brought by employees will be enforced as written;
  • Arbitration is still a valid method of resolving employment related claims; and
  • Employees may not band together to form quasi class actions against an employer in an arbitration setting.

You can read the Court's full opinion here:

Epic v Lewis (U.S. 2018) by Bryan Tuk on Scribd