The Supreme Court ruled Monday that the National Labor Relations Act (NLRA) does not bar employers from subjecting employees to mandatory arbitration agreements that prohibit employees from bringing collective actions. As many as 60 million American workers may be subject to such mandatory arbitration agreements. Such agreements may bar employees from pursuing collective actions under the Fair Labor Standards Act and other wage payment laws, where an employer may have cheated scores of employees out of only a small amount of money. Such claims may not be worth pursuing on an individual basis, enabling an unscrupulous employer to continue such practices indefinitely.
The 5-4 decision, written by Justice Gorsuch and joined by the court’s four other conservative justices, resolved three cased argued together earlier in the term: Epic Systems Corp. v. Lewis, Ernst & Young LLP v. Morris and National Labor Relations Board v. Murphy Oil USA. The employees in each case argued that the arbitration agreements violated the NLRA, which prohibits employer actions that restrict employees’ ability to work together for “mutual aid and protection.” The majority rejected this claim, pointing to the Federal Arbitration Act, which allows for the “judicial facilitation of private dispute resolution through arbitration.”
Critics of the decision believe that mandatory arbitration agreements dramatically shift power and leverage to companies, and effectively deny workers the opportunity to bring less valuable claims.