Client Alert: Employers Prevail in Dispute Over Agreements Requiring Individualized Arbitration

Today the U.S. Supreme Court resolved a circuit split regarding the enforceability of employment agreements requiring individualized arbitration of Fair Labor Standards Act claims, mostly for allegedly unpaid minimum and overtime wages.  See Epic Systems Corp. v. Lewis, No. 16-285, 2018 WL 2292444 (U.S. May 21, 2018).  In a 5-4 opinion authored by Justice Gorsuch (over a strongly-worded dissent by Justice Ginsburg, joined by Justices Breyer, Sotomayor, and Kagan), the Court held that the National Labor Relations Act did not undermine or make illegal agreements requiring employees to individually arbitrate collective-action claims, as opposed to proceeding as a collective action on behalf of similarly-situated employees.  The Court followed Congress’s instructions in the Federal Arbitration Act that courts enforce arbitration agreements like other contracts, and it thus concluded that employment agreements requiring individualized arbitration of collective-action claims were enforceable.