The U.S. Supreme Court in a 5-4 Decision authored by Justice Gorsuch recently found in favor of employer (not employee) rights when enforcing arbitration agreements. The Supreme Court ruled that employees could not ignore individual arbitration agreements and band together to challenge wage and hour or other labor law violations.
The Court pointed out that the Federal Arbitration Act preempts other federal laws on the subject, including the National Labor Relations Act. In other words, the Federal Arbitration Act, in effect since 1925, trumps other statutes when determining if arbitration is mandated or not.
Justice Gorsuch wrote: “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. While Congress is of course always free to amend this judgment, we see nothing suggesting it did so in the NLRA – much less that it manifested a clear intention to displace the Arbitration Act.”
Unless the Federal Arbitration Act is amended in the coming months or years, there will be greater use of arbitration agreements in governing disputes with employees or others, and class actions will be discouraged. This decision also emphasizes the strong public policy supporting arbitration, particularly with respect to disputes that fall under the auspices of the Federal Arbitration Act. Arbitration – including in employment disputes – is alive and well.