Employment Contracts After Epic SCOTUS Decision: Arbitration Agreements and Class Waivers

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The National Labor Relations Board (NLRB) ruled in 2012 that agreements requiring only individual arbitration—that is, barring class or collective arbitration—violated the NLRA and were an unfair labor practice. Since then, the NLRB has steadfastly held that employers commit unfair labor practices by requiring their employees to sign arbitration agreements that include class action or collective action waivers. Appellate courts were divided over whether to uphold the NLRB’s conclusions and whether to enforce such provisions.

The U.S. Supreme Court accepted and consolidated three cases for review; Epic Systems Corp. v. Lewis from the Seventh Circuit was the lead case. The Court held employers may include class action and collective action waivers in mandatory arbitration agreements with their employees, and that such agreements do not violate the NLRA.

As a result of this ruling, it is recommended that attorneys representing businesses take a new look at arbitration agreements and consider 1) modifying existing agreements to include mandatory class action waivers, or 2) designing and implementing arbitration agreements with such waivers for use going forward. Although these mandatory arbitration agreements were standard before the ruling, experts project these agreements will become the norm.

Listen as our expert panel discusses the recent Supreme Court decision, what employers can do to ensure their arbitration programs are enforceable, and new strategies employers can expect to see from plaintiffs’ attorneys in light of the anticipated increase in class action waivers.