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U.S. Supreme Court’s decision in Epic Systems Corp. v. Lewis
Argued: October 2, 2017 Decided: May 21, 2018
The case:
An employee at Epic Systems Corporation, Jacob Lewis, filed a class action lawsuit in federal
court against the company he worked for claiming that his employers failed to compensate him
and his co-workers for overtime pay in violation to the Fair Labor Standards Act of 1938. To
counter what Jacob did, Epic Systems filed a motion to dismiss it and instead compel for
arbitration. Earlier on in 2014, Epic systems had made it mandatory for those who wanted to work
within the company to consent to resolving individual
Wage-and-hour claims through arbitration and further stipulating that employees who wanted to
pursue those claims could not do so under a class action or collective action.
Epic Systems Corporation’s motion got denied by the Federal District Court but the Seventh
Circuit Court of Appeals a three judge panel believed that the class or collective action waiver for
work-related claims violated the provisions of the National Labor Relations Act for example,
section 7 “the right to self-organization, to form, join, or assist labor organizations, to bargain
collectively through representatives of their own choosing, and to engage in other concerted
activities for the purpose of collective bargaining or other mutual aid or protection, as well as the
right to refrain from any or all such activities.”(NLRB.gov., n.d.). And section 8(a)(1) which
prevents the employer “to interfere with, restrain, or coerce employees in the exercise of the rights
guaranteed in Section 7 of the Act.”(NLRB.gov., n.d.).
The issue:
Can an employer prohibit employees from pursuing work-related claims in a class or collective
action?
The outcome:
Agreement to arbitrate had to be enforced under the Arbitration Act hence, the decision by the
Seventh Circuit Court was reversed by the Supreme Court in favor of Epic Systems Corporation’s
call for Arbitration.
Question presented:
Whether or not an agreement between an employer and employee requires to solve any work–
related issues through individual arbitration, waive class and collective proceedings can be
enforceable under Federal Arbitration Act in spite of the provisions of the National Labor
Relations Act?
In each of these cases, an employer and employee entered into a contract providing for
individualized arbitration proceedings to resolve employment disputes between the parties. Each
employee nonetheless sought to litigate Fair Labor Standards Act and related state law claims
through class or collective actions in federal court.
Although the Federal Arbitration Act generally requires courts to enforce arbitration agreements
as written, the employees argued that its saving clause removes this obligation if an arbitration
agreement violates some other federal law and that, by requiring individualized proceedings, the
agreements here violated the National Labor Relations Act. The employers countered that the
Arbitration Act protects agreements requiring arbitration from judicial interference and that neither
the saving clause nor the NLRA demands a different conclusion. Until recently, courts as well as
the National Labor Relations Board’s general counsel agreed that such arbitration agreements are
enforceable. In 2012, however, the Board ruled that the NLRA effectively nullifies the Arbitration
Act in cases like these, and since then other courts have either agreed with or deferred to the
Board’s position.
Held:
Congress held the stance that in the Arbitration Act, that arbitration agreements providing for
individualized proceedings must be enforced, and neither the Arbitration Act’s saving clause or
even the NLRA suggests otherwise.
The employees argued that even if the Arbitration Act may enforce Arbitration agreement as
similar to their case, the agreement will be rendered unlawful and hence the NLRA will override
that guidance.
Justice Neil Gorsuch stated that “as a matter of law the answer is clear. In the Federal Arbitration
Act, Congress has instructed federal courts to enforce arbitration agreements according to their
terms including terms providing for individualized proceedings. Nor can we agree with the
