Supreme Court Rules Employment Arbitration Programs With Class Action Waivers Are Lawful

Miller & Martin PLLC Alerts | May 21, 2018

The U.S. Supreme Court this morning issued a 5-4 decision upholding the use of pre-dispute mandatory arbitration programs with class action waivers in the employment setting.  In doing so, the Court resolved a split between the lower Courts of Appeal and rejected the view of the National Labor Relations Board that class action waivers violate employees’ rights to engage in protected concerted activity under the National Labor Relations Act. 

There are pluses and minuses to litigating employment claims in court or in arbitration, but one of the biggest advantages of arbitration programs is that employers can protect themselves from class and collective actions.  Therefore, if you are an employer that was waiting to decide whether to implement a mandatory arbitration program, the Court’s ruling could tip the balance in favor of arbitration.  If you already have an arbitration program with a class waiver, you can breathe a sigh of relief, and perhaps be somewhat more aggressive in the terms of your program (e.g., whether there is an opt-out provision).  You should still be cautious and thoughtful in how you draft an arbitration program, how you communicate it to new and existing employees, and how you implement the program.

The cases are Epic Systems Corp. v. Lewis, Case No. 16-285; Ernst & Young LLP et al. v. Stephen Morris et al., Case No. 16-300; and NLRB v. Murphy Oil USA Inc., Case No. 16-307, in the Supreme Court of the United States. 

We will provide additional thoughts and analysis soon.  In the meantime, please feel free to contact Brad Harvey or any other member of our Labor & Employment Department with any questions.