An Epic Decision on Arbitration for Employees

The U.S. Supreme Court’s latest employment litigation decision requires employees to focus on all the terms of the employment contracts they sign with their employers.

When negotiating an employment contract, to the extent an employee can, people tend to focus on one main thing: pay. After that, some may be thinking about benefits and holiday time but rare is the person who would think about much more than that.

However, on May 21, 2018, in Epic Systems Court v. Lewis, the U.S. Supreme Court gave employers across the country another reason to think more deeply about the other terms in their contracts. The case involved employment contracts with individualized arbitration provisions. While the Federal Arbitration Act generally requires arbitration agreements to be enforced as written, the employees sought to bring their claims as a class action, arguing the individualized agreement violated the National Labor Relations Act’s (“NLRA”) provision protecting employees’ rights to self-organize and bargain collectively. In a 5-4 decision, the Court found the NLRA does not prohibit the individualized clause and that employers can require employees to arbitrate disputes individually.

As a job begins, everyone involved hopes the relationship between employer and employee will be mutually beneficial and successful. Unfortunately, that’s not always the case, and it is important to think ahead to what could go wrong before signing the contract to hire an employee.

In this instance, an individualized arbitration clause means the employer can avoid costly and time-consuming class action lawsuits and arbitrations that complicate the legal issues involved. These cases can bog down an employer and negatively impact the employer’s ability to focus on what matters most: running a successful business.

While arbitration clauses may not jump out as the most important terms of a contract they could end up being far more important than even salary and benefits details, so make sure to pay close attention to these terms. Even better, confer with an experienced employment law attorney who can do the hard work for you.