Source:  Printing Industries of America's HR Flash Report / Director of Human Relations Adriane Harrison, May 22, 2018 

On May 21, 2018, the United States Supreme Court decided that it is legal for employers to require employees to agree to arbitration and waive their right to participate in a class action lawsuit or other collective actions. Epic Systems Corp. v. Lewis, No. 16-285, May 21, 2018. 

Arbitration agreements are often used by companies as a way of managing risk should a dispute arise with a current or former employee. The legality of this type of arbitration agreements was unclear, as it seemed to violate the National Labor Relations Act. The Supreme Court determined that the Federal Arbitration Act supersedes the NLRA on this issue. The Court was split 5-4 on the decision, with Justice Neil Gorsuch writing for the majority and Justice Ruth Bader Ginsburg dissenting. 

The effect of this decision is that it protects employers from defending very costly class action lawsuits. The number of actions filed against employers is expected to drop because on an individual basis, the damages suffered by a single employee may not be enough to warrant filing suit. For instance, if a company has failed to pay overtime wages in violation of the FLSA and state law, each employee would be required to file an action against the employer individually, rather than joining together in a class action lawsuit. The cost of arbitrating individually, however, could likely exceed the missing overtime wages and other damages, which will discourage workers from bringing an action against their company. 

If your company incorporates arbitration agreements and class action waivers in the new-hire paperwork, the Supreme Court says you can continue to do it. If your company does not use this agreement and waiver, it is time to consider including them in your new-hire paperwork. 

If you have any questions, please contact Printing Industries of America's Director of Human Relations Adriane Harrison for assistance at 412-259-1707 or aharrison@printing.org.