Supreme Court Affirms Employers Can Bar Employee Class Actions

In a controversial decision which does not bode well for workers, the United States Supreme Court recently ruled that employers can force employees to waive their right to band together and pursue collective actions against their employer. The majority opinion was written by the newest Supreme Court Justice Neil Gorsuch, who wasted no time in cementing his conservative bona fides and repaying the people who got him on the bench. Justice Ruth Bader Ginsburg, joined by three other justices, wrote a furious dissent and took the unusual step of reading it from the bench.

The decision, in a case titled Epic Systems v. Lewis, decided three consolidated appeals originating from the Fifth, Seventh, and Ninth Circuits.

Following a trend dating back several years if not more, the Supreme Court held that mandatory arbitration clauses requiring individual arbitration barred employees from collective action – despite an opinion by the National Labor Relations Board to the contrary. Justice Gorsuch framed the issue in a way that left little doubt as to what his answer would be: “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 actions, no matter what they agreed with their employers?” Gorsuch then answered: “As a matter of policy these questions are surely debatable. But as a matter of law the answer is clear.”

Justice Ginsburg accused the court of reviving so-called “yellow dog” contracts (contracts where the employee was forced to agree as a term of employment not to join a labor union) and of ignoring the extraordinary imbalance of power between employer and employee. She also criticized the majority for what she saw as an unduly narrow reading of the NLRA, pointing out that Congress has never declared “employees with wage and hours claims may seek relief only one-by-one,” and arguing the majority opinion continues an unjustified expansion of the FAA to achieve results the Act’s drafters could not have imagined.

Regardless of one’s opinions,  Epic Systems is a clear win for large employers and a big loss for employees.  Workplace protections are more vulnerable than ever – and employee wage and hour class actions are in serious jeopardy.