Arbitration Agreement and Class Action Waiver Enforcement in Employment Litigation and the Impact of the Supreme Court's Decision in Epic Systems

By: John B. Lewis and Dustin D. Dow

This article provides step-by-step guidance to consider when enforcing arbitration agreements and class action waivers in employment cases. Arbitration agreements are agreements that force individuals to bring legal claims in arbitration, rather than in court. A class action waiver is an agreement, or a section in a broader agreement, that restricts an individual’s ability to bring a class action. Employers often include class action waivers in arbitration agreements.

Step 1: Considering Key Legal Issues to Determine the Enforceability of Class Action Waivers and Arbitration Agreements

This section provides guidance on the Supreme Court’s pivotal decision on the enforceability of class action waivers in Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (2018), and subsequent cases interpreting Epic Systems . It also addresses issues to consider in analyzing whether arbitration agreements, which frequently include class action waivers, are enforceable.

U.S. Supreme Court’s Pivotal Decision in Epic Systems Corp. v. Lewis

The controversy surrounding the validity of employment arbitration agreements with class action waivers had been simmering since at least 2012. With the Supreme Court’s May 21, 2018, decision in Epic Systems , we have an answer: They “must be enforced as written” despite any provision within the National Labor Relations Act (NLRA) that suggested otherwise. ¹

Prior to the Supreme Court’s Epic Systems decision, the Seventh and Ninth Circuits held that an arbitration agreement precluding collective arbitration or class actions violates Section 7 of the NLRA ² and is unenforceable under the Federal Arbitration Act (FAA), which we address below in the section entitled “The Federal Arbitration Act.” The Seventh and Ninth Circuits were squarely at odds with the Second, Fifth, Eighth, and Eleventh Circuits, which had previously held that the FAA’s policy of favoring arbitration overrides any concerted activity rights employees have to class or collective remedies.

To read the full practice note in Lexis Practice Advisor, follow this link.

John B. Lewis is a partner in BakerHostetler’s Cleveland, Ohio office and concentrates his practice on the resolution of complex employment, labor, and regulatory disputes, including the defense and oversight of class action litigation. The majority of John’s time is devoted to litigation, appellate practice, and alternative dispute resolution procedures involving federal and state anti-discrimination, wage and hour, and fair housing laws, the Railway Labor Act, the Civil Rights Acts, the Federal Reserve Act, and the Employee Retirement Income Security Act, as well as wrongful discharge, trade secret, non-competition, and work-related tort claims. He has participated in more than 90 cases before federal and state appellate courts, including the filing of amicus briefs in the U.S. Supreme Court. Dustin D. Dow focuses his practice on nationwide class actions, employment representation, and insurance coverage. With comprehensive litigation experience, Dustin manages clients’ needs throughout the litigation process, from pre-discovery to appeals. As the editor of the firm’s annual class action review, Dustin is continually abreast of the most recent and relevant trends affecting companies dealing with potential class action liability.

1.Epic Systems, 138 S. Ct. at 1632. 2. 29 U.S.C.S. § 157.