What Does SCOTUS Arbitration Provision Decision Mean For Employers, Employees?

United States Supreme Court
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PITTSBURGH (NewsRadio 1020 KDKA) – The US Supreme Court handed down a victory for employers Monday, ruling 5-4 that employers can require workers to arbitrate disputes individually.

Monday’s decision resolved three cases – Epic Systems Corp. v. Lewis, Ernst & Young LLP v. Morris and National Labor Relations Board v. Murphy Oil USA – that all dealt with an employee who had signed a contract containing an arbitration provision before filing lawsuits seeking individual and collective claims. The employers involved argued their arbitration agreements required individual arbitrations.

The court’s conservative members agreed, prohibiting class or collective action by employees who have agreed to the provisions. This decision does not affect union members.

The decision came down to reconciling two federal laws. The 1925 Federal Arbitration Act declares an agreement to arbitrate a dispute “shall be valid, irrevocable, and enforceable.” The National Labor Relations Act passed 10 years later allows collective bargaining by employees, protecting their right “to self- organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection.”

Joe Quinn, employment and labor lawyer with Cozen O’Connor, told the KDKA Radio Afternoon News Monday the decision was not surprising, as this court’s majority has supported employers in arbitration agreement cases consistently.  

“In 2012, the National Labor Relations Board found that its right to engage in concerted activities included a right to pursue a class action,” Quinn said. “And the Supreme Court said today that’s a huge leap … from a 1935 statute to collectively bargain.”

The majority opinion authored by newest Justice Neil Gorsuch states nothing in the National Labor Relations Act trumps the Federal Arbitration Act and that “the law is clear.”

Justice Ruth Bader Ginsburg criticized the decision in her dissent, calling it “egregiously wrong.” Many critics including Justice Ginsburg believe the ruling will prevent workers from filing claims.

“It could make more [employees] want to make and form unions; that decision is really driven by other factors,” Quinn said. “I think it will make more employers consider using employment agreements and requiring arbitration of disputes; I think we’ll clearly see an increase of that.”