The U.S. Supreme Court’s recent decision in Epic Systems v. Lewis is a win for employers who have included or wish to include class action waivers in arbitration agreements that employees are required to sign as a condition of employment. On May 21, the Supreme Court rejected the existing position of the National Labor Relations Board (NLRB), which had held that arbitration agreements waiving the right to pursue class or collective actions violated federal labor law. The Supreme Court overturned the NLRB and held that the Federal Arbitration Act (FAA) requires such mandatory arbitration agreements to be enforced according to their terms. Following this decision, individual arbitration provisions may preclude employees from pursuing class or collective actions to resolve employment disputes.

The Supreme Court held that Congress has instructed in the Federal Arbitration Act that arbitration agreements providing for individualized proceedings must be enforced, and neither the Federal Arbitration Act’s saving clause nor the National Labor Relations Act suggests otherwise. Prior to Epic Systems, the NLRB had interpreted Section 7 of the National Labor Relations Act to encompass the right to bring a class or collective action, as it gives employees the right to organize, bargain collectively and engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection. Consequently, the NLRB’s position was that an employment agreement that required employees to resolve their workplace disputes (such as wage and hour and discrimination claims) by arbitration on an individual basis was an unfair labor practice under Section 8 of the National Labor Relations Act.