Supreme Court Approves Forcing Employees into One-On-One Arbitration, Exacerbating the Power Imbalance Between Employees and Employers

Earlier this week, the Supreme Court killed one of the few remaining mechanisms for employees to get some measure of justice for the illegal acts of their employers – class arbitrations. The National Labor Relations Act (“NLRA”) was enacted in 1935 to protect the right of workers to band together and engage in collective action for their mutual aid and protection. Normally, the NLRA protects workers in the context of a union- when the workers are forming a union, when they are engaged in collective bargaining, and during strikes. However, even in non-union contexts, the NLRA protects workers who engage in collective action.

In Epic Systems Corp. v. Lewis, the Supreme Court decided that the NLRA does not protect the right of workers to engage in collective action through class-wide arbitrations, and instead, employers can compel employees to one-on-one arbitration for any workplace disputes or claims. In doing so, the Court ignored the realities of employment arbitration agreements and shifted the power squarely to employers.

Employees rarely “agree” to arbitration. Employees are often confronted with take-it-or-leave-it arbitration agreements – if the employee doesn’t sign, she doesn’t get the job. In the past, many arbitration agreements would require employees who sign the arbitration agreement to waive their right to go to court, and instead forces the employee into closed-door arbitrations. Usually the agreements include any claims – including discrimination and wage and hour claims.

As if this is not bad enough, employers have started including sections in arbitration agreements prohibiting employees from filing claims together as a class. For years, class-wide arbitrations have been an effective tool for workplace disputes – especially wage and hour claims for low-wage workers. For example, if a group of employees believes they have been misclassified or haven’t received meal and rest breaks, they have been able to band together to file a single class-wide arbitration against their employer. There is power in numbers.  Where an individual employee may not have the means to hire an attorney, especially where the damages are low, a class-wide arbitration has the potential for substantial recovery and is often an attractive prospect for attorneys. In her dissent, Justice Ginsberg noted: “By joining hands in litigation, workers can spread the costs of litigation and reduce the risk of employer retaliation.” The cases before the Supreme Court challenged this practice – arguing that allowing employers to force employees into one-one-one arbitration is a violation of the right of employees to band together under the NLRA. Unfortunately, the Supreme Court disagreed and employers now have the green-light to force employees into arbitration agreements that waive class claims.

We agree with Justice Ginsberg that the Court’s decision is “egregiously wrong” and that this decision exacerbates the power imbalance between employers and employees that the NLRA was designed to correct. While this decision eviscerates an especially powerful tool for holding rogue employers accountable, our firm is committed to preserving employee rights both in court and arbitration. If you feel you have an employment claim, contact our offices today.

Jean Krasilnikoff