Employers in the United States received a win from the Supreme Court on Monday, as the court ruled in favor of arbitration clauses that force employees to settle disputes through individual arbitration, rather than through joint legal proceedings such as class action and collective lawsuits. The court ruled 5-4 in Epic Systems Corp. v. Lewis, which sought to determine whether arbitration clauses in employment contracts can be legally enforced. Though the Federal Arbitration Act stipulates that arbitration contracts are “valid, irrevocable and enforceable,” the plaintiffs argued the law conflicted with the National Labor Relations Act, which guarantees workers “the right ... to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”
In his opinion for the court, Justice Neil Gorsuch argued that the two laws are not in conflict with each other, making arbitration clauses legally valid. He wrote it would be up to policymakers, not the courts, to change the law.
Monday’s ruling was hotly contested by Justice Ruth Bader Ginsburg, who wrote in her dissenting opinion that the majority decision was “egregiously wrong.”
The court’s ruling will have wide-ranging effects for employees. According to the Economic Policy Institute, 24.7 million American workers — 23.1% of all private-sector nonunion employees — have employment contracts that contain the class-action waivers at the heart of Monday’s decision.
CityLab noted the policies particularly affect working-class employees, and policies banning class-action suits are in place at such high-profile companies as Wells Fargo, Time Warner Cable, T.G.I. Friday’s, Olive Garden, Target, Macy’s and Amazon.
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