Epic Goes to Washington

January 18, 2017

Epic Systems, like many other successful businesses in the United States, uses arbitration agreements to limit exposure to the significant and often unpredictable damages a class-action lawsuit may potentially bring. Arbitration agreements bring certainty to conflict resolution within the confines of these highly successful businesses. Arbitration agreements are not only for the benefit of the employer, as they allow both the employer and employee to resolve disputes and avoid lengthy, inefficient, and expensive court proceedings. The Supreme Court of the United States has decided to address the validity of class action waivers in these arbitration agreements in the wage and hour context.

In Epic Systems Corp. v. Lewis, the high court will address whether an agreement that requires an employer and an employee to resolve employment-related disputes through individual arbitration, and further requires employees to waive class and collective proceedings, is enforceable under the Federal Arbitration Act, notwithstanding provisions of the National Labor and Relations Act (“NLRA”) and the Fair Labor Standards Act.

The federal government argues this type of arbitration agreement is not enforceable because the NLRA protects employees’ ability to engage in protected concerted activities such as action by two or more workers for their mutual aid or protection regarding terms or conditions of employment. In other words, the federal government wants to protect the workers’ right to bring or participate in a class-action lawsuit against their employer and Epic Systems argues its employees can waive participation in class proceedings.

The NLRA is a source of labor policy governing labor relations in the United States and defines “concerted activity” as the right of employees to self-organize, form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and to refrain from any or all of such activities.

The Supreme Court, in the past, has been supportive of arbitrating disputes, including employment disputes. The question here is will the Supreme Court go one step further and permit employers to include in an arbitration provision a waiver of participation in class action proceedings.

For more information about "Epic Goes to Washington," contact John G. Walsh at jgwalsh@axley.com or 608.283.6744.