In recent years, more companies have begun requiring employees to sign mandatory arbitration agreements and have all employment disputes decided in arbitration, as opposed to in court.
Some of these arbitration agreements do not permit employees to assert claims on a class-wide basis and limit arbitration to individual claims.
Consequently, employers are closely watching the Epic Systems Corporation v. Lewis case, which is before the U.S. Supreme Court this term.
The federal courts have been deeply divided on this issue. Specifically, the Seventh and Ninth Circuit Courts of Appeals have found such arbitration agreements to violate the National Labor Relations Act (NLRA).
To the contrary, the Fifth Circuit has permitted class-action waivers in arbitration agreements.
Employees in this Epic Systems case are arguing that the waiver of class-action employment claims in the arbitration agreement interferes with their Section 7 rights under the NLRA to engage in protected, concerted activity.
In its last few rulings on arbitration agreements, the U.S. Supreme Court has narrowly upheld the use of mandatory arbitration agreements in the employment context by relying on the Federal Arbitration Act.
Additionally, the Supreme Court in the consumer setting has upheld arbitration agreements. Nevertheless, arbitration agreements are still being challenged in courts and in a variety of settings (employment, consumer, nursing home residents).
In the meantime, employers are well advised to have any arbitration agreements they may utilize reviewed by legal counsel to attempt to avoid having the agreement challenged and found to be unenforceable.
If class waivers are ruled to be proper in the employment setting, more employers may consider the use of arbitration agreements to resolve employment disputes.
Caroline J. Berdzik is a partner with Goldberg Segalla LLP in Princeton, N.J. She devotes her practice to helping corporate clients navigate employment law issues from proactive counseling through dispute resolution and trial. Her clients include transportation companies. She can be reached at cberdzik@goldbergsegalla.com.
