August 18, 2019

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SCOTUS: Employers Can Compel Individual Arbitration of Wage and Hour Claims

In its eagerly-awaited opinion in Epic Systems Corp. v. Lewis, the U.S. Supreme Court held on May 21 that class action waivers in arbitration agreements between employers and employees do not violate the National Labor Relations Act.  The opinion resolves a split among federal circuits, and reiterates—once again—the strong federal policy favoring arbitration.  In the underlying cases, the employers emailesd their employees arbitration agreements requiring resolution of wage and hour (and other) claims by individual arbitration, and employees who continued to work for their employers following receipt of the document were deemed to have accepted the agreement to arbitrate on an individual basis.

While challenges to class action waivers have been rather popular in recent years, the legal conclusion that such waivers are permissible is, in the words of the Supreme Court, “clear” and “unmistakable.”  As Justice Gorsuch wrote for the 5-4 majority, “[i]n the Federal Arbitration Act, Congress has instructed federal courts to enforce arbitration agreements according to their terms—including terms providing for individualized proceedings.”

Generally speaking, the FAA applies to an arbitration agreement—and preempts all state laws—when the economic activities of the parties have some nexus to interstate commerce.  The application of Epic Systems to the relatively smaller group of arbitration agreements not subject to the FAA remains to be seen.

The opinion ostensibly abrogates last year’s decision of the New York State Appellate Division in Gold v. New York Life Ins. Co., 153 A.D.3d 218 (1st Dep’t 2017), which relied on the Seventh Circuit’s decision in Epic Systems—now reversed—to declare class and collective action waivers in arbitration agreements unenforceable under the NLRA.  The opinion also calls into question the rules issued by New York City’s Department of Consumer Affairs under the Freelance Isn’t Free Act, which state that “[i]f a contract [between a hiring party and a freelance worker] includes language that waives or limits a freelance worker’s right to participate in or receive money or any other relief from any class, collective, or representative proceeding, said waiver or limitation is void.”  See N.Y.C. Rules, Tit. 6, § 12-05(b).

Stay tuned for further analysis of this groundbreaking development.

© 2019 Proskauer Rose LLP.

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About this Author

Allan Bloom, Litigation Attorney, Proskauer Rose Law Firm
Partner

Allan Bloom is an experienced trial lawyer who represents management in a broad range of employment and labor law matters. He has successfully defended a number of the world’s leading financial services, investment management, technology, consumer products, telecommunications, publishing, insurance, construction, and lodging companies, as well as global law firms and cultural institutions, against claims for unpaid wages, employment discrimination, breach of contract, and wrongful discharge, both at the trial and appellate court levels.

212.969.3880
Mark W Batten, Labor & Employment Attorney, Proskauer Law Firm
Partner

Mark Batten is a Partner in the Labor & Employment Law Department and co-head of the Class/Collective Action Group, resident in the Boston office.

Mark represents employers nationwide at all stages of complex employment litigation, including class and collective actions on wage and hour matters and discrimination claims. Ranked by Chambers USA, Mark is hailed as “a fabulous lawyer, handling interesting and complex cases.” Clients “highly recommend him to anyone seeking litigation counsel in the Boston area,” as well as note “he is responsive, pragmatic and team-oriented, and offers excellent legal advice.”

He assists clients with all aspects of employment policies and practices, including hiring, termination, leaves, accommodation of disabilities, and other matters. Mark also handles diverse civil litigation, including litigation of noncompetition agreements, ERISA matters, discrimination and wrongful termination litigation in federal and state courts; proceedings before the Massachusetts Commission Against Discrimination; wage and hour matters; and labor arbitrations. He is also an experienced appellate attorney both in employment cases and other civil litigation, handling appeals at all levels in the state courts and in the United States Courts of Appeals.

617-526-9850