What a Recent Supreme Court Ruling Means for Employment Law

“As with all matters legislative, right now our partisan polarization stands in the way. But hope springs eternal that our better angels, and our ability to compromise—on this and other matters, will eventually return.”

The Supreme Court’s decision in Epic Systems Corp. v. Lewis in May 2018 continued—and may have ended judicially—the steady march toward the privatization of U.S. employment claims. On May 21st, the Court decided, 5-4, in an opinion authored by new Justice Neil Gorsuch, that ‘agreements’ between employers and employees to resolve employment claims via individual arbitration trump employees’ later assertions—assertions that the arbitration agreement violates a collective right, given to employees by another federal statute. Thus, employers may continue to require workers, as a condition of employment, to agree to bring all employment claims only through final and binding individual arbitration, with no resort to the collective and class rights granted by law—in a private setting, and with little right of appeal.

This march began in 1991 when the Court in Gilmer v. Interstate/Johnson Lane Corp. held that a financial services employee, whose agreement to arbitrate was part of his registration with the New York Stock Exchange, could not void that agreement simply because his dispute implicated federal anti-discrimination law. In Gilmer, the Court observed that the Federal Arbitration Act aimed to “place such agreements upon the same footing as other contracts.” Ten years later the Court construed the FAA’s exemptions narrowly in Circuit City Stores v. Adams, and the rush toward privatization was on.

As of 1997, according to estimates by the American Arbitration Association, cited by the Supreme Court, more than 3.5 million American workers were covered by private arbitration agreements, precluding their pursuit of employment claims in court. Recent studies suggest that number has risen to approximately 60.1 million workers—more than half of the private sector nonunion workforce.