Supreme Court Decides in Favor of Employers on Arbitration Agreements

On May 21, 2018, the United States Supreme Court decided a long running debate between employers and employees regarding the enforcement of individualized arbitration agreements to resolve employment disputes between the parties. In a holding many are touting as a win for employers, the Supreme Court ruled in Epic Systems Corp. v. Lewis, that arbitration agreements between an employee and employer to resolve disputes between the two should be enforced in despite arguments by employees that such agreements violated the National Labor Relations Act.

Prior to this determination, lower courts and the National Labor Relations Board have flip flopped on this issue for many years, making it difficult for employers and employees to agree on a dispute resolution venue. Prior to 2012, the National Labor Relations Board and courts around the country agreed with employers' arguments in this matter that the arbitration agreements with employees were enforceable under the Arbitration Act, which requires arbitration agreements to be interpreted as written, free from interference by the courts. Since 2012, the NLRB and some courts have adopted the opposite view in favor of the employees, argument that the arbitration agreement violates the NLRA, by requiring employees to engage in individualized arbitration proceedings with employers. Employees further argue that due to this federal law violation, employees are free to pursue state and federal court claims under the Federal Arbitration Act's "savings clause"; whereas, employees were barred from bringing claims in state or federal court under the arbitration agreements.

HOW COULD THIS DECISION IMPACT YOU?

The Epic Systems Corp. v. Lewis decision has had immediate results on a number of pending cases, deciding those cases arguing over the enforceability of the same arbitration agreement issue as well as some class action lawsuits wherein class members will be forced to arbitrate instead of continue as a member of the class.

Thanks to the Supreme Court's decision in this matter, the ongoing battle between employers and employees on arbitration agreements has tilted in favor of employers...for now. While the immediate impact of this decision can be seen in those pending cases that have now been decided, what remains unknown is the effect this case may have between employers and employee negotiating of dispute resolution forums in the future, not to mention the fate of employee lead class action lawsuits. It also remains to be seen if this decision will silence arguments by employees against the use of arbitration agreements or if it will spur additional backlash and new arguments against such practices.

You can read the full Supreme Court decision here. If you have any questions regarding this decision or would like to discuss its possible impacts to you, please contact Thompson Coe myHRgenius@thompsoncoe.com or visit our website at thehrgenius.com.

 
 
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