Supreme Court Rules on Workplace Arbitration Contracts Barring Class Actions

by Michelle Bomberger | May 30, 2018

On May 21, 2018, the U.S. Supreme Court ruled in Epic Systems Corp. v.  Lewis that an employer may  require employees to agree to take all employment-related disputes to arbitration on an individual basis, and to waive their right to participate in a class action or class arbitration. This case is a victory for employers because it overrules the National Labor Relations Board’s (“NLRB”) D.R. Horton, Inc. 2012 case in which the NLRB held that employees cannot be forced to arbitrate their employment claims because it would waive their right to litigate or arbitrate their statutory employment claims on a collective basis and violate their right to engage in collective activity for mutual aid and protection under the National Labor Relations Act.

This decision is not unprecedented because the Supreme Court had previously ruled that employment disputes could be subject to a mandatory arbitration agreement.  However, it does clarify the split in the federal courts that was created after the D.R. Horton NLRB decision.  The decision is a victory for employers because it will limit employment class action or class arbitration claims.  As a result, employers will likely face fewer claims as employees will forego individual arbitration claims against employers due to the expense of pursuing claims on their own.

Equinox will continue to monitor this decision and how it impacts employers.