Crucial Labor and Employment Issues on the Line in Landmark U.S. Supreme Court Case

By Jo Bennett

UPDATE 10-04-2017

The oral argument before the U.S. Supreme Court on Monday, October 2, was reported in the media as reflecting a deeply divided Court. It was noted that many thousands of employers and 25 million employees from coast to coast will be affected by the decision in this case.

Questions from Chief Justice Roberts and Justices Alito and Kennedy seemed to indicate their understanding of the need identified by employers to resolve the tension between the Federal Arbitration Act and the National Labor Relations Act in a way that allows employers to efficiently resolve workplace disputes through arbitration. Deputy Solicitor General Jeffrey Wall argued in support of this position, saying: “It is a fundamental attribute of arbitration, and this Court said it three times [in past decisions], to pick the parties with whom you arbitrate. And our simple point is this case is at the heartland of the FAA. It is, at best, at the periphery of the NLRA, on the margins of its ambiguity, and you simply can’t get there under the Court’s cases.”

Justices Thomas and Gorsuch did not ask questions during the oral argument. It has been reported that Justice Gorsuch has supported the use of arbitration and sought to limit the scope of the NLRA in cases he decided as an appellate judge before joining the Supreme Court.

The U.S. Supreme Court will hear oral argument on Monday, October 2 in Epic Systems Corp. v. Lewis, an important labor and employment case in which Schnader has filed an amicus brief on behalf of the Mortgage Bankers Association and State Mortgage Lending Associations.

The appeal, which consolidates three cases from different federal circuits, addresses whether an employer can require employees to resolve work-related disputes through individual arbitration and not through collective actions. The issue before the Court points up the tension between the Federal Arbitration Act, which encourages arbitration of disputes, and the National Labor Relations Act, which gives employees the right to engage in concerted activity.

This case has drawn significant national interest, and not just from industry insiders. Articles about the case have appeared in USA Today and Newsweek. More than two dozen “friend of the court” briefs have been filed. The switch in presidential administrations earlier this year resulted in a reversal of the official position of the federal government, which now supports the employers’ position for upholding contracts mandating individual arbitration.

Businesses have a lot at stake in this case. Employers, especially small employers, are concerned about controlling the costs and risks associated with employment-related disputes. Employers depend on the efficiency and cost savings of arbitration, as well as the predictability and enforceability of class and collective action waivers, to resolve work-related conflicts.

While the case before the Supreme Court remains pending, employers should be mindful of the uncertainty of the legality of class-action waivers. In general, however, many employers will benefit by working with its counsel to prepare legally enforceable arbitration agreements to resolve employee disputes.

Stay tuned as Schnader closely follows the oral arguments on October 2 and as we assess the ultimate decision of the Court as it impacts employers of all kinds throughout the country. Follow us on SchnaderWorks and on Twitter @Schnader.