Supreme Court Backs Employers on Forced Arbitration, Limiting Employee Class Actions
A divided U.S. Supreme Court ruled that employers can force workers to use individual arbitration instead of class-action lawsuits to press legal claims. The decision potentially limits the rights of tens of millions of employees.
In a 5-4 decision, the justices, along ideological lines, said for the first time Monday that employers can enforce arbitration agreements signed by workers, even if those accords bar group claims. The majority rejected contentions that federal labor law guarantees workers the right to join forces in pressing claims.
The ruling builds on previous Supreme Court decisions that let companies channel disputes with consumers and other businesses into arbitration. The latest decision applies directly to workers’ wage-and-hour claims, and its reasoning might let employers avoid class action job-discrimination suits as well.
“The policy may be debatable but the law is clear: Congress has instructed that arbitration agreements like those before us must be enforced as written,” Justice Neil Gorsuch wrote for the majority.
Arbitration supporters say that forum is cheaper and more efficient than traditional litigation. Critics say companies are trying to strip individuals of important rights, including the ability to band together on claims that as a practical matter are too small to press individually.
Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan dissented. Ginsburg called the ruling “egregiously wrong.”
“The inevitable result of today’s decision will be the underenforcement of federal and state statutes designed to advance the well-being of vulnerable workers,” Ginsburg wrote.
The workers in the case said the National Labor Relations Act guarantees them the right to press claims as a group, either in arbitration or in court. The 1935 law protects “concerted activities” by workers, without explicitly mentioning lawsuits.
The majority said that language wasn’t specific enough to overcome a separate 1925 law that says arbitration agreements must be enforced like any other contract.
About 25 million employees have signed arbitration accords that bar group claims, a lawyer for the workers in the case told the court.