View Our Practice Areas

Supreme Court Holds Arbitration Agreements are Enforceable

Jim Fausone, Esq.

This month the Supreme Court released a significant employment law decision that may impact future employer-employee disputes. In Epic Systems Corp. v. Lewis the high court ruled in favor of the employer. The issue originated from a group of employees wishing to litigate employment disputes through collective actions in federal court. Upon employment, the employees entered into a contract providing for individualized arbitration proceedings to resolve employment disputes between the parties. The court was charged with determining whether or not individualized arbitration agreements, which prevent employees from bringing collective actions against their employer, are enforceable.

In a 5-4 vote, the conservative majority held in favor of the employer, while Justice Ginsburg led the four liberal dissenters. Justice Gorsuch wrote for the majority, beginning the opinion by stating that as a matter of policy these issues are certainly debatable but that as a matter of law there is only one clear conclusion.

While the Federal Arbitration Act (FAA) generally provides that arbitration agreements are to be enforced, here the employees argued that its "saving clause" removes this obligation if the agreement violates another federal law. They opined that the individualized arbitration agreements violate the National Labor Relations Act (NLRA). The court disagreed with this reasoning, holding that neither the saving clause nor the NLRA suggest individualized arbitration agreements aren't enforceable.

The dissenting opinion argues that the court is opening the door for a return to a time of the "yellow dog" contract, where employees were not able to join unions. Additionally, Justice Ginsburg writes that preventing employees from bringing collective actions shifts too much power to employers and the secretive nature of the arbitration process may lack the necessary transparency to effectively resolve these issues.

Justice Gorsuch spent five pages responding to the dissenting opinion. He writes that the dissent "retreats to policy arguments" and emphasizes that the court is not free to substitute their preferred economic policies for those debated in Congress. Further, he explains the court's duty is simply to interpret the law. Gorsuch responds to the dissents "yellow dog" claim by asserting that employee's rights to join unions "stand every bit as strong today as they did yesterday." Finally, Justice Gorsuch acknowledges the dissents claim that collective actions spread the cost of litigation, but adds that they can also unfairly pressure employers to settle unmeritorious claims.

With pending cases still forthcoming relating to labor unions and "fair share" fees, employment and labor law will see several significant decisions from the Supreme Court this year.

No Comments

Leave a comment
Comment Information
Email Us For A Response

Contact Our Firm

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Office Location:
41700 West Six Mile Road, Suite 101
Northville, MI 48168

Toll Free: 888-674-1189
Toll Free: 800-693-4800
Phone: 248-468-4536
Fax: 248-380-3434
Map & Directions

  • Best Criminal Defense Lawyers in Ann Arbor -2020