News & Insights

Recent Posts

COVID-19: Assessing the Legal Risk of Infectious Diseases

WSHB Employer Alert: FFCRA and DOL Regulations 4.2.20

Employment Practices Consultation & COVID-19

It’s a No-Win Situation: The Perils Facing Hospitals Due to the Coronavirus

COVID-19 Employer Alert: Summary of the CARES Act

COVID-19: New York Malpractice Law Alert

COVID-19 Employer Alert: Enactment of Families First Coronavirus Response Act (FFCRA)

WSHB Co-Founder Stephen Henning to Announce the Winner of CLM's 2020 Outside Counsel Professional of the Year Award

WSHB Partner Robert Hellner Shares Mediation Tactics at CLM’s 2020 Annual Conference

Risk Transfer and Contractual Indemnification – Who Gets Left Holding the Bag?

New Developments in Challenging Certificates of Merit — Seeking Dismissal for Failure to Concurrently File Certificate with the Original Petition

Seven Habits that Define a Highly Effective Claims Team

Social Media Do's and Don'ts

Read the Room: Arguments that Work in Court but May Backfire at Mediation

WSHB Partner Kelly Waters Named to NJBIZ's 2020 Best Fifty Women in Business List

WSHB Names Andrew S. Kessler as Managing Partner of the Firm's Philadelphia Office

WSHB Employment Alert: California Law Banning Arbitration Agreements Temporarily on Hold

Sam McDermott on the Dos and Don’ts of Construction Project Termination

Full Disclosure! Insurer Beware: Colorado’s New Automobile Policy Disclosure Law Has Teeth!

Andrew S. Kessler Named Legal Counsel for Northeast Community Center for Behavioral Health

WSHB Elevates Ten Partners to Defined Equity Status

Eleven WSHB Attorneys Elected Into Partnership

Eighteen Attorneys Elected to WSHB Senior Counsel

Supreme Court Allows Suit Over Website Accessibility

Strategies for Defending Legionella and Mold Claims

Residential Revolution

Time Limit Demand Issues Arrive in North Carolina

WSHB Welcomes New Partner Julie A. Weerth to the Firm's New York Office

Temp Agency Absolved of Liability in Hotly Contested Action

Alternative Fee Agreements and Construction Issues: Oil and Water or Perfect Pairing!?

WSHB's Graham Miller Helps Demystify Construction Claims in the Pacific Northwest

WSHB Partner Janice Michaels Named to The Best Lawyers in America© 2020 List

One Bad Apple: Navigating through Sexual Battery and other Intentional Torts

Leading Construction Litigator Cynthia Tari Joins WSHB's Dallas Office

WSHB’s Philadelphia Partner Secures Summary Judgment in Catastrophic Premises Liability Matter

WSHB Welcomes New Partner Andrew Kessler

New Bill In New York Proposed for Signature by Governor Andrew Cuomo is Set To Make Employers "SWEAT"

Renowned Litigator Jason Williams Joins WSHB's Nevada Office

Litigator Richard Young Joins WSHB's Nevada Office

Published Appellate Opinion Upholding Summary Judgment in Favor of Commercial Tenant Against $3.5M Subrogation Suit

17 WSHB Lawyers Honored as 2019's Rising Stars

Arizona Supreme Court Allows Court of Appeals Decision Expanding Defendants' Ability to Enforce Settlements to Stand

WSHB’s Jason Klein Breaks Down the Good, the Sad and the Funny Sides of Claims

Litigating Sexual Battery and Other Intentional Torts: Navigating the One Bad Apple in Medical Negligence

WSHB Partner Michelle Arbitrio to Moderate Panel on Insurance and Risk Management in the Age of Mass Shootings

Girl on Fire: The Price of Pursuing the Truth in the #MeToo World

Pragmatic Issues on Settlement Versus Trial for Legal Malpractice Cases

WSHB Partner Jade Tran Named to Lawyers of Color's "Nation's Best" List

A Withering Assault

The Natural Progression of Natural Disasters

Nevada’s Governor Signs Chapter 40 Reform Bill

WA Condo Law Changes Hope to Curtail Frivolous Defect Lawsuits and Stimulate Production

WSHB Co-Founder Stephen Henning Steps Into the Spotlight at this Year's West Coast Casualty Seminar

Professional Liability Expert Weighs In On Protecting Your Practice From Opioid Doc Arrest Fallout

Penalties, Punitives, and Granny Cams: The Escalating Lure of Elder Abuse Litigation

Are Structured Settlements Still Relevant

Game Changing Trends Affecting Construction

He's Not My Guy: The Joint-Employer Doctrine

WSHB Case Update: DOL Proposes Increase to Minimum Salary Threshold

WSHB and DWF Announce Exclusive Association

Litigation Amid the Covid-19 Pandemic: Emerging Trends in Employment Law

Litigation Amid the Covid-19 Pandemic: Emerging Trends in Directors and Officers and Securities Litigation

Vincent P. Beilman III Elected WSHB London Market Chair

Constance Endelicato Quoted in Insurance Journal - Nursing Home Insurance Market In Need of Care

WSHB Case Update: Epic Systems Corp. v. Lewis

May 23, 2018

Epic Systems Corp. v. Lewis (— S. Ct. —, May 21, 2018, J. Gorsuch) (J. Ginsburg, dissenting)

On Monday, May 21, 2018, the Supreme Court issued a decision every private employer will be ecstatic to understand and implement into their practice. The majority opinion, authored by Justice Neil Gorsuch, held employers: (1) may rely upon clauses in their employment contracts requiring employees to arbitrate their disputes individually; and (2) may require employees to waive the right to resolve those disputes through joint legal proceedings.

This decision is being lauded as a tremendous boon for employers as it will undoubtedly cut down on employee lawsuits, whether it be wage and hour violations or overtime claims. Forcing employees to individually arbitrate their claims—and thus individually rather than collectively pay for counsel—will drastically reduce the financial viability of those claims. Justice Ginsburg, in a dissent joined by Justices Breyer, Sotomayor, and Kagan, pointedly observed (using figures from the cases before the bench as an example) that a typical employee will now likely need to spend in excess of $200,000 at arbitration in order to recover $1,867.02 in overtime pay. Only the most begrudging and vindictive employees would see such prospective pyrrhic victories as acceptable.

Understanding the rationale and legal framework for this employer-favoring outcome is best accomplished by examining the three cases the Supreme Court addressed in issuing this ruling: Epic Systems Corp. v. Lewis, Ernst & Young LLP v. Morris, and National Labor Relations Board v. Murphy Oil USA. In each case, an employment agreement containing an arbitration provision and a provision waiving rights to class-action suits was required as a condition of employment. Nonetheless, the employees filed individual and collective claims in federal court. Understandably, the employers moved to compel arbitration pursuant to their respective employment agreements. When both the Seventh and Ninth Circuit ruled in favor of the employees, the Supreme Court granted certiorari to address ostensible conflict between the National Labor Relations Act (NLRA) and Federal Arbitration Act (FAA).

At oral argument before the Supreme Court, the employees argued the NLRA’s reference to the right to engage in “other concerted activities for the purpose of collective bargaining or other mutual aid or protection” superseded the FAA’s arbitration mandate. (In general, the FAA requires courts to enforce agreements to arbitrate, including the terms of arbitration the parties select, except in cases of fraud, duress, or unconscionability.) In rejecting this argument, the Court wrote, in no uncertain terms, that the NLRA “does not even hint at a wish to displace the Arbitration Act—let alone accomplish that much clearly and manifestly, as our precedents demand.” Accordingly, the Court found no legal basis for ignoring the FAA’s mandate.

A foreseeable and perhaps even inevitable consequence of Monday’s decision is an immediate increase of arbitration agreements in employment contracts. As Justice Ginsburg’s dissent notes, the inclusion of arbitration clauses was already on an upwards trajectory: only 2.1% of nonunionized companies used arbitration clauses in 1992, whereas 53.9% use them today. We are certain to see this trend accelerate. However, whether more widespread use of arbitration agreements will effect the “underenforcement of federal and state statutes designed to advance the well-being of vulnerable workers” portended by the dissent is perhaps more speculative. After all, as the Justice Ginsburg recognizes, the U.S. Department of Labor, state labor departments, and state attorneys general may still uncover and obtain recovers for some violations.

As a bottom-line takeaway for employers, Monday’s decision is a great incentive to include mandatory arbitration agreements in all employee contracts, and should provide significant leverage in settling potential claims early in the litigation process while claimant costs are low. It also signals the Gorusch Court will favor employers. And, with the possible retirement of the dissent’s author, Justice Ginsburg, age 85, an extended period of employer-favored decisions may be on the horizon.

 

PRINT

Privacy Policy      |      Site Map

© 2020 Wood Smith Henning & Berman LLP

Subscribe to our mailing list

* indicates required