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Bryan E. Kuhn
Counselor at Law, P.C.
Business & Employment Law Attorney

Supreme Court’s controversial ruling on mandatory arbitration

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The U.S. Supreme Court has ruled that mandatory arbitration agreements for employers are enforceable.

The U.S. Supreme Court recently delivered a highly controversial ruling that pitted employees’ rights to file class-action lawsuits against employers’ usual preferred method of resolving disputes on a case-by-case basis through mandatory arbitration. As PBS Newshour reports, the top court ruled that employment contracts that include mandatory arbitration clauses and class-action waivers are enforceable. The ruling is largely being seen as a win for employers and a setback for workers’ rights.

Mandatory arbitration clauses

The case was essentially meant to resolve a conflict between two federal laws: the Federal Arbitration Act of 1925 and the National Labor Relations Act (NLRA). The NLRA has been interpreted as giving employees the right to pursue class-action claims against an employer, whereas the Arbitration Act has been interpreted as giving employers the right to include mandatory arbitration clauses in employment contracts.

Mandatory arbitration binds the employer and employee to resolving their disputes through arbitration rather than litigation. Often it requires the employee to waive their right to pursue class-action lawsuits and means that disputes can only be resolved individually rather than collectively. Employers tend to favor mandatory arbitration clauses since they tend to be cheaper and faster than litigation.

Split court favors employers

The court ruled 5-4 in favor of employers, thus making employment contracts’ mandatory arbitration clauses and waiver of class-action rights enforceable. The decision was controversial, however, with Justice Ruth Ginsberg reading her dissent from the bench-a sign of deep disagreement on the issue.

Justice Ginsberg, as the New York Times reports, pointed out that employers are far more reliant on mandatory arbitration clauses today than in the past. In 1992, just two percent of non-unionized employers asked their workers to sign mandatory arbitration agreements, whereas today that figure has soared to 54 percent. She also warned that by making it difficult for workers to ban together through class-action lawsuits, the court was making it easier for unscrupulous employers to violate those employees’ rights.

Justice Neil Gorsuch, on the other hand, wrote for the majority and called such concerns “apocalyptic.” He contended that while there may be disagreements about whether mandatory arbitration agreements are good policy, the Federal Arbitration Act clearly makes such agreements legal and enforceable. It is up to Congress, he contended, to change the law if it decides that such agreements are not in the public interest.

Employment law help

When disputes between employers and employees arise, they can be stressful and costly for both parties. That is why it is important to reach out to an employment law attorney as soon as possible. An attorney can help clients understand what rights they have under the law and how to go about protecting those rights in the most effective way possible.

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