The United States Supreme Court has ruled in a 5-4 decision that employers have a right to require employees resolve claims against employers individually, rather than on a class-action basis. Workers routinely sign arbitration agreements in their hiring paperwork, and before the decision in Epic Systems v. Lewis, there was a conflict in the law about whether such private agreements could be enforced.
The result of this decision is that workers whose employers have arbitration agreements in place cannot join a wage and hour or other employment class action. Going forward, employers will require as a condition of employment that employees bring claims before an arbitrator hired by the company. This means claims of all kinds, including wage and hour issues, wrongful termination and sexual harassment complaints, will be heard privately and outside of the court system.
In Epic Systems, a group of employees sued their employers for “wage theft,” arguing the employers underpaid them. While each individual claim was small and not worth the cost or time of litigation, taken together the employees were successful in bringing a class action complaint on behalf of all persons similarly situated.
This decision is the latest in a series of cases that has limited the way class action lawsuits may be raised in the United States. The Court has also restricted the ability of consumers to use the class action vehicle for relief against false advertising and other unfair business practices.
Justice Ginsburg wrote for the dissent, noting: “When workers charge their employers with unlawful conduct — in this case, violations of laws governing wages earned and hours worked — there is strength in numbers.” Justice Ginsburg also urged immediate congressional action to draft a law that would provide protections for workers who now have no recourse within the court system to file a collective action.
Some commentators have suggested that this decision now provides employers with a “free pass” to engage in wage theft, because it is unlikely workers will have the time or resources to pursue individual claims for small amounts of money.