Will an Arbitration Agreement Hold Up in Court?

Earlier this year, the Supreme Court of the United States heard the case of Epic Systems Corp v. Lewis. The case dealt with the issue of whether the Federal Arbitration Act (FAA) has more authority over arbitration agreements made between employers and employees than the National Labor Relations Act (NLRA).

This issue featured three similar cases combined into one, each of which involved an employee choosing not to take the employer to court. Instead, each employee entered into an agreement with an employer to resolve labor disputes that would possibly arise by arbitration.

In a 5 to 4 decision, the court sided with the employers. Here’s a brief look at the reasoning behind the decision.

The NLRA vs. the FAA

After signing the arbitration agreements, employees argued against the agreements’ validity after disputes affected those individuals and their coworkers. According to the employees, the arbitration agreements prevented them from taking part in class-action lawsuits, which they believed to represent protected activity under the NLRA.

According to Justice Neil Gorsuch’s majority opinion, however, the primary goal of Congress in adopting the NLRA was to allow employees to unionize. This meant the NLRA’s protected activity is union building but not arbitration agreements. With this ruling, any arbitration agreements that preclude class-action litigation are not inherently illegal but depend upon how those agreements are established.

Ultimately, it is crucial for employers to incorporate provisions into arbitration agreements that allow them to avoid litigation if an employee decides to challenge an agreement’s validity. For further guidance, contact an experienced West Virginia employment attorney with Pullin, Fowler, Flanagan, Brown & Poe, PLLC. Call us at 304-344-0100 or contact us online to schedule an initial consultation.