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Employer-Employee Arbitration Agreements Are Enforceable and Are Not Prohibited by the National Labor Relations Act

By Maureen A. Murphy

On Monday, May 21, 2018, in a 5-4 opinion written by Justice Neil Gorsuch in the case of Epic Systems Corp. v. Lewis, the Supreme Court upheld the enforceability of “one-on-one” arbitration agreements between employers and employees. These types of arbitration agreements prohibit employees from bringing class action suits to challenge employer conduct.  The Court rejected the argument of the employees that the National Labor Relations Act, which allows unionized and non-union employees the right to “engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection,” makes illegal and unenforceable arbitration agreements between employers and employees that otherwise comply with the requirements of the Federal Arbitration Act.  As a result, agreements whereby employees agree to resolve through one-on-one arbitration any disputes that arise between them and their employer are valid and enforceable by virtue of the Federal Arbitration Act.  These agreements can only be invalidated if a standard contract defense, such as fraud, duress or unconscionability, can be pled and proven. The Supreme Court made it clear that employer-employee arbitration agreements are enforceable even though they require bilateral arbitration.

Click here for a more detailed summary of the Court’s opinion.

If you have questions or concerns regarding this ruling and how it affects your business, please contact Andrew Kopon at [email protected] or 312-506-4470, Maureen Murphy at [email protected] or 312-506-4475; or Colette Kopon at [email protected] or 312-506-4459.