Supreme Court: Employers Can Require Individualized Arbitration of Employment Disputes

The decision means employers can stop employees from combining cases in situations like wage disputes.

The U.S. Supreme Court has established that employers may, by agreement, require employees to arbitrate employment disputes individually rather than collectively. (Epic Systems Corp. v. Lewis, 584 U. S. ____ (2018).) Here's the basic scenario that the Supreme Court's decision applied to:

  • An employee enters into an employment agreement saying that the employee will resolve any employment disputes through arbitration.
  • The agreement says that any such arbitration will be individualized—that the employee can't combine his or her claims with the claims of other employees (as with a class action) to effectively team up against the employer.
  • The employee, joining with other employees with similar claims, sues the employer in federal court for alleged violation of the Fair Labor Standards Act (FLSA) and state law.

The Supreme Court determined that this kind of case does indeed have to be resolved through individualized arbitration. In other words, such employees are stuck with the arbitration terms of their employment agreements and have to bring their own, separate claims.

Effective date: May 21, 2018.