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Epic Systems Corp v. Lewis

Full name: Epic Systems Corp. v. Lewis

Click here to read the decision

Samuel Alito
Neil Gorsuch
Anthony Kennedy
John G. Roberts
Clarence Thomas

Stephen Breyer
Ruth Bader Ginsburg
Elena Kagan
Sonia Sotomayor

Note: Court justices do not represent any political party. The color of each judge's name represents the political party of the president who appointed the judge.

Click here for a list of all Supreme Court justices

A clash between old but powerful laws

This case was about a conflict between two laws that were enacted before most people reading this were born.

The 1925 Federal Arbitration Act requires that arbitration clauses in contracts be enforced.

In this particular case, the clause was used in employment contracts to prohibit class actions - demanding that disputes be resolved by each individual affected.

The 1935 National Labor Relations Act guarantees employees "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" (emphasis added).

Employees allege they were illegally underpaid

The case involved employees who claimed their employers underpaid them in violation of the Fair Labor Standards Act (FLSA).

The employees filed class action lawsuits against the companies.

However, their employment contracts allowed the companies to use arbitration rather than lawsuits to settle disputes. The contracts also required that cases be decided on an individual-by-individual basis - meaning employees could not take action as a group.

Nothing in worker rights explicitely supercedes arbitration

The court ruled that the Federal Arbitration Act (FAA) takes precedence because there is nothing in the National Labor Relations Act (NLRA) that specifically preempts it.

In his majority opinion, Justice Neil Gorsuch wrote that the NLRA's catchall phrase other mutual aid or protection appears at the end of a detailed list regarding unions, and therefor must relate to those terms in some way.

Ginsburg's dissent

In dissent, Justice Ruth Bader Ginsburg wrote that arbitration clauses in employment contracts should be considered illegal (making them unenforceable) because contracts relate to voluntary, negotiated agreements, whereas in employment contracts "one party sets of the terms of an agreement while the other is left to 'take it or leave it.'"

Gorsuch: Less enforcement of employee rights not Court's problem

Allowing employers to avoid collective litigation for wages and hours infractions would reduce enforcement, Ginsburg wrote in her dissent.

She said that the cost to employee for filing an individual dispute likely would exceed any benefit they would receive. They also risk retaliation from their employer.

"The upshot: Employers, aware that employees will be disinclined to pursue small-value claims when confined to proceeding one-by-one, will no doubt perceive that the cost-benefit balance of underpaying workers tips heavily in favor of skirting legal obligations," Ginsburg wrote.

Gorsuch - in spite of his judgement to protect an employer's right to demand arbitration - said he did not necessarily disagree with Ginsburg's predictions. He said though, that it is up to Congress to enact a law to achieve any desired effect.

"The respective merits of class actions and private arbitration as means of enforcing the law are questions constitutionally entrusted not to the courts to decide but to the policy-makers in the political branches," he wrote.

More information about this case

The case was a consolidation of three separate cases...

o Epic Systems Corp. v. Lewis
o Ernst & Young v. Morris
o National Labor Relations Board v. Murphy Oil USA

The decision does not affect workers who are part of a labor union. It affects only non-union workers who sign an employment agreement allowing for arbitration.

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