Supreme Court to Rule on Legality of Employee Arbitration Agreements

Over the years, there has been an increase in the use of arbitration agreements. Many employers report using these agreements because they are considered to be a speedy and cost-effective alternative to class action litigation, which can result in large damages awards. In the past, the Supreme Court has upheld the general enforceability of arbitration agreements under the Federal Arbitration Act and in the consumer context.

This month, however, the U.S. Supreme Court decided that it will review three cases to determine whether an employer may enforce mandatory arbitration agreements that contain class action or collection action waivers. The Supreme Court will review NLRB v. Murphy Oil (where the Fifth Circuit held that mandatory class action waivers do not violate the National Labor Relations Act (NLRA)); Ernst & Young v. Morris (where Ninth Circuit held that mandatory class action waivers do not impinge upon Section 7 rights under the NLRA); and Epic-Systems v. Lewis (where the Seventh Circuit held that mandatory class action waivers do impinge upon Section 7 rights). The result of this Supreme Court decision will impact all employers who utilize arbitration agreements in their workplace. However, this is the first time that the Supreme Court will review the legality of these waivers in the employment context. The issue will be whether arbitration agreements conflict with Section 7 of the NLRA.

Tristan & Cervantes has advised many companies regarding their employment related matters. Please contact us via email or call us at 312.345.9200 with any questions you may have.