Can Your Company Force You Into Arbitration? The Supreme Court Hears Argument

October 2, 2017, the United States Supreme Court heard oral argument in a series of consolidated cases that will impact the ability of millions of employees to come together and bring class action lawsuits to enforce their workplace rights.

These cases, known collectively as Epic Systems Corp. v. Lewis, present the important question of whether employment agreements that require employees to resolve employment-related disputes through individual arbitration (and thus waive their right to bring class action lawsuits) violate federal labor standards. Workers-rights advocates contend that such arbitration agreements and “class action waivers” are contrary to the protections afforded under the National Labor Relations Act, a New Deal-era law that has long enabled employees to engage in “concerted activity.” On the other side, corporate advocates argue that the Federal Arbitration Act, another longstanding federal statute, endorses the use and enforceability of arbitration agreements and class action waivers in the employment context. The Supreme Court’s ultimate decision in Epic Systems Corp. will have far-reaching implications, as it will determine whether employees who have signed such agreements can be forced into arbitration and forego their rights to bring class action lawsuits for a variety of work-related disputes, including unpaid overtime and wage claims, employment claims involving race, age, or sex discrimination, “meal and rest break” claims, and other workplace grievances.

In an interesting wrinkle, the lawyers who argued the opposing sides of the case before the Supreme Court were both government attorneys, representing the interests of different federal agencies. Arguing on the employees’ side was Richard Griffin, Jr., general counsel for the National Labor Relations Board (“NLRB”), and on the other side was Jeffrey Wall, Acting Solicitor General of the U.S. Department of Justice (“DOJ”). Notably, the DOJ had previously filed a brief in support of the NLRB’s position in September of last year, but after the Trump administration took office this January, the DOJ switched sides and adopted a pro-employer position in favor of arbitration.

Although it is too early to tell how the Supreme Court will ultimately rule, the October 2 oral argument offered some revealing clues on how certain individual Justices view the case and will be inclined to vote. Through their questioning and comments during the argument, the Justices appeared to be divided along historical “left-right” ideological lines, as some of the conservative members of the Court, including Chief Justice Roberts, Justice Kennedy, and Justice Alito, expressed a favorable view toward the DOJ’s position that employment-arbitration agreements do not violate the NLRA. Chief Justice Roberts, in particular, noted that a ruling against the use of arbitration provisions and class action waivers would be a massive disruption of the status quo and effectively invalidate employment agreements covering approximately 25 million employees. Justices Thomas and Gorsuch—the newest addition to the Court—remained silent during the argument, but given their established conservative-judicial leanings on corporate issues, they are likely to side with the DOJ’s pro-employer position.

The Court’s more liberal wing, particularly Justices Ginsburg, Breyer, Sotomayor, and Kagan, appeared to be supportive of the NRLB’s position that arbitration provisions and class action waivers violate the NRLA’s statutory right of employees to pursue collective action. Justice Ginsberg went as far as characterizing arbitration agreements as “yellow dog” contracts, referring to the outdated and illegal practice of requiring workers to give up union membership. Justice Kagan also commented that, under the NLRA, “employers can’t demand as conditions of employment the waivers of concerted rights.”

The Supreme Court is expected to hand down a decision in Epic Systems Corp. by June 2018. But if the divisive nature of the oral argument provides any signal, the Supreme Court’s decision will very likely be split.

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