In 2018, the United States Supreme Court held that employees can no longer seek the remedy of a class action lawsuit against employers if the contract between the two contains an arbitration clause. The decision applies only to non-union private employees whose contracts contain a provision which dictates that disagreements with the employer are to be settled on an individual basis through the use of arbitration. Although this remains a subject of ongoing debate and litigation in employment law, it is still true that currently employers can require employees to settle disputes individually in arbitration, preventing them from filing a class action suit along with their fellow employees.
Prior to this decision, employees who had similar disagreements with employers (such as disputes over unpaid overtime) could band together and sue the employer together for violations of the National Labor Relations Act (NLRA) of 1935. The benefit for employees to band together under a class action lawsuit is that it spreads out the cost of litigation and the threat of many successful lawsuits can pressure employers into taking their employees’ concerns more seriously. This allows those employees who have smaller claims a better chance of recovery without spending more than they are owed in litigation costs.
The issue for the Court to decide was whether the Federal Arbitration Act of 1925 and the National Labor Relations Act of 1935 were in conflict with one another. The Federal Arbitration Act requires courts to enforce arbitration clauses contained in employment agreements. Here, the employees argued that the National Labor Relations Act of 1935 provided them with the right to sue employers using a class-action lawsuit even if their employment agreements contained arbitration clauses. The Court held, in a 5-4 decision, that the National Labor Relations Act of 1935 did not provide employees with such a remedy. The Court noted that the National Labor Relations Act only specified that employees have the right to unionize and utilize collective bargaining in their agreements with employers – a right that is not affected by the Court’s 2018 ruling.
The Court stated that it is up to Congress to draft legislation which specifically provides employees the right to utilize class action lawsuits, which would effectively repeal the Federal Arbitration Act. You can read more by clicking here.
If you wish to contact your congressional representatives to implore them to change this legislation, use these links to contact the senate and house representative. If you have questions about your rights as a worker, or you’re facing a situation at work involving a workplace injury or unsafe workplace practices, you can get in touch with a local workers’ compensation attorney who can advise you on your ability to pursue action against your employer in your case.