Client Alert: U.S. Supreme Court Upholds Mandatory Arbitration Clauses in Employment Contracts

On Monday, May 21, 2018, the United States Supreme Court in Epic Systems Corp. v. Lewis, ruled in a 5 to 4 decision that employers can utilize mandatory arbitration provisions to bar employees from bringing class-action lawsuits over employment disputes.  In reconciling conflicting federal laws, the Supreme Court held that mandatory arbitration agreements providing for individualized proceedings must be enforced.

As a practical matter, the Court’s decision is a big win for employers.  Companies may include provisions in employment contracts that require employees to bring any dispute through individualized arbitration and bar the filing or joining of a class-action lawsuit.  As compared to arbitrating a single employee dispute, a class-action lawsuit, even a frivolous one, can consume substantial time and resources.  Employers would be wise to consult with an attorney about whether using mandatory arbitration agreements could be beneficial to help limit potential claims and damages over employment related disputes.

The Supreme Court’s decision can be accessed here.

For more information on the history of this case, please see a prior Mallery & Zimmerman blog post.