Supreme Court Bans Employee Class Action Suits

The U.S. Supreme Court recently issued a significant decision involving the right of employees to file class action lawsuits against their employers. By blocking class action lawsuits by employees who signed arbitration agreements, the Court ruled in favor of employers and against the employees disputing the underpayment of their overtime wages.

Epic Systems Cor v. Lewis

In the matter of Epic Systems Cor. v. Lewis, employees filed suit to join a federal class action lawsuit based on allegations of their employer violating the Fair Labor Standards Act by underpayment of overtime wages. All the involved employees had previously signed arbitration contracts prohibiting collective legal proceedings. In a 5-to-4 decision in favor of the employers, the Court held that federal arbitration law took precedence over a federal labor law protecting workers’ rights to collectively bargain. The signed arbitration contracts were legal and enforceable, thereby preventing the employees from joining a class action lawsuit.

By finding signed arbitration agreements must be enforced as written, the Court favored the language of the Federal Arbitration Act over the National Labor Relations Act. The Federal Arbitration Act is meant to promote arbitration as an alternative to filing suit; the National Labor Relations Act is designed to protect workers. The Court held that employees failed to prove the arbitration agreements, which required employees to file individualized arbitration proceedings rather than class action lawsuits, violated federal law.

While the conservative majority focused on the interpretation of the language of the arbitration law, the liberal minority stressed that the ability of workers to confront employers collectively has been a priority since the 1930s and the New Deal. Highlighting the difficulty some workers face in filing lawsuits on their own to dispute unfair or unjust wages, the Court’s Minority decision emphasized that federal labor laws allowing workers to band together offers an important and necessary protection for workers.

Strength in Numbers

Supporters of employees’ rights to collectively bargain believe employees have strength in numbers and often need combined financial resources to fight employers in a wage dispute. The employees in the Epic Systems case were disputing overtime pay claims too small to be worth pursuing individually due to the high costs of litigation.

Justice Ginsburg’s Opinion

Justice Ruth Bader Ginsburg wrote a dissenting opinion finding the decision wrong for failing to give employees and employers equal footing with respect to wage bargaining. Her opinion stressed that the National Labor Relations Act was passed to address workplace power imbalance between vulnerable workers and employers, which should not be ignored.

She further cautioned this decision would result in a lack of enforcement of state and federal labor laws and the return to take it or leave it and yellow dog employment contracts, which attempt to block employees from joining unions and suppress a worker’s right to seek legal remedies for employment grievances or wage disputes. Justice Ginsburg characterized the Majority’s decision as a destructive result that ignored the last 80 years of federal labor laws.

Middletown Employment Lawyers at McOmber McOmber & Luber, P.C. Handle All Matters of Employment Law

The experienced Middletown employment lawyers at McOmber McOmber & Luber, P.C. represent New Jersey employees and employers in a wide variety of employment law matters, including class actions and wage and hour disputes.

Call our Red Bank office at 732-842-6500, our Marlton office at 856-985-9800, our Newark office at 973-878-9040, or contact us at 888-396-0736 or online for a free consultation. We represent clients throughout New Jersey.