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Serrins & Associates LLC Employment Law Blog

Wednesday, June 6, 2018

The Supreme Court Drops an Employment Law Bombshell

Last week, the Supreme Court issued its decision in the case Epic Systems Corp. v. Lewis. Not every Supreme Court case makes it on the front page of the nation’s newspapers, but this one did, and you might be wondering why. Let’s take a look at Epic Systems and see how it affects your rights as an employee, and whether the pessimistic headlines are justified.

First, the facts that led to this case: three companies - accounting firm Ernst & Young, software maker Epic Systems, and energy producer Murphy Oil - found themselves mired in lawsuits by employees that all asked the same basic underlying question. In all three cases, employees of the company in question had signed an employment contract mandating that any disputes between the employee and the employer be handled via binding arbitration. That is to say, if an employee felt that his or her employer had violated a law regulating employment - for example, the Fair Labor Standards Act - that employee was barred from pursuing litigation against the company in a court of law. Rather, the employee could choose an arbitrator, who would hear both sides of the dispute and issue a binding decision. (Arbitration is a less formal type of dispute resolution - no judge, no courtroom, no rules of evidence, etc.) Importantly, each individual employee dispute would be addressed in an individual arbitration. In other words, groups of employees with common claims could not band together to have their claims heard jointly.

 

In Epic Systems, the Supreme Court upheld these mandatory individual arbitration clauses, finding that they are proper and legal contractual provisions that employers may enforce.

 

You might be asking, why does this matter? After all, the employee still gets to have their dispute heard. In the case of Ernst & Young, the employee was even allowed to choose the arbitrator who would issue a decision. Perhaps a real-world example can shed some light on why employment lawyers are so concerned by the Epic Systems decision.

The National Labor Relations Act gives employees the right to band together as a class to fight alleged employer legal abuses. Employees of the fast-food chain Chipotle took advantage of this right to file a lawsuit featuring approximately 10,000 plaintiffs, all of whom had the same core complaint: Chipotle forced them to work off the clock, and didn’t pay them for that time. Each individual claim by a Chipotle employee may be for only a view thousand, or even a few hundred, dollars - the amount of money they were illegally not paid. But collectively, the employees’ claims could add up to millions of dollars that they are owed.

Some Chipotle employees - those hired after August of 2014 - had to “sign” (actually, click a digital box) a form stating that they could not pursue litigation or collective arbitration, just like the employees of the companies in Epic Systems.

Here’s the problem: the cost of bringing an individual arbitration proceeding, including having a lawyer represent you, may be more than the money you are actually owed. This is the benefit of class actions: by banding together small claims, they create large judgments that can pay for legal services as well as pay the individual claimants the money they are owed. Additionally, Chipotle employees who take advantage of individual arbitration could be seen as troublemakers by the company, lone wolves who risk being targeted by the company for payback.

This is why employee class actions are such a vital tool for enforcing employee rights. A company that faces a potential judgment of millions of dollars for violating employee rights has much more incentive to play by the rules, than a company that might face rulings of a few thousand dollars, here or there.

There are now calls, including from Justice Ruth Bader Ginsburg in her dissent to the Epic Systems majority opinion, for Congress to pass a law overriding Epic Systems and protecting the rights of employees to engage in class action litigation. We shall see if this comes to pass. In the interim, the attorneys of Serrins & Associates are available to talk to you about disputes with your own employer, whatever they may be.






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