Supreme Court: Employers can Enforce Arbitration Agreements with Workers

Posted on May 23, 2018 by - News of the Day

In a case involving Verona health software giant Epic Systems, a divided Supreme Court ruled Monday that businesses can prohibit their workers from banding together in disputes over pay and conditions in the workplace.

The decision has ramifications far beyond Epic, affecting an estimated 25 million non-unionized employees. While the complaints in Monday’s decision involved pay, the outcome also might extend to workplace discrimination and other disputes if employee contracts specify that they must be dealt with in one-on-one arbitration.

Lawyers representing management said the decision protects businesses from endless, costly litigation. The ruling reflected a years-long pattern at the Supreme Court of limiting class actions and favoring employer-favored arbitration over lawsuits in the courts, generally preferred by workers.

The high court’s task was to reconcile federal laws that seemed to point in different directions. On the one hand, New Deal labor laws explicitly give workers the right to band together. On the other, the older Federal Arbitration Act encourages the use of arbitration, instead of the courts.

Justice Neil Gorsuch, writing for the majority, said the contracts are valid under the arbitration law. “As a matter of policy these questions are surely debatable. But as a matter of law the answer is clear,” Gorsuch wrote. “In many cases over many years, this court has heard and rejected efforts to conjure conflicts between the Arbitration Act and other federal statutes. In fact, this court has rejected every such effort to date (save one temporary exception since overruled).”