U.S. Supreme Court Rules on Enforceability of Individual Arbitration Agreements in Employment Contracts
On 21 May 2018, the U.S. Supreme Court (the Supreme Court) handed down its decision in Epic Systems Corp. v. Lewis finding that arbitration agreements in which an employee agrees to arbitrate any claims against an employer on an individual rather than on a class or collective basis are enforceable and are not in violation of the National Labor Relations Act (the NLRA).
The judgment concerned three consolidated cases: Epic Systems Corp. v. Lewis; Ernst & Young LLP v. Morris and NLRB v. Murphy Oil USA, Inc. As the Court noted, the three cases differed in detail but not in substance.
In previous decisions (see: AT&T Mobility v. Concepcion; American Express Co. v. Italian Colors Restaurant; DIRECTV, Inc. v. Imburgia), the Supreme Court had already ruled that companies were entitled to include individual arbitration clauses in their consumer contracts which explicitly precluded those consumers from resorting to class arbitration. In the present case, the Supreme Court had to rule on whether companies could also include individual arbitration clauses in their contract with their employees which required those employees to waive their rights to participate in class and collective actions.READ MORE