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US high court: Class-action waivers enforceable in employment agreements

Verona-based Epic requires its employees to sign an agreement that precludes them from suing the company over wage-related claims. (Staff photos by Kevin Harnack)

The U.S. Supreme Court handed down a decision on Monday in a case involving Jacob Lewis, a former technical writer who sued Verona-based Epic Systems, alleging it had shorted him on his wages. (File photo by Kevin Harnack)

The U.S. Supreme Court has handed down a decision finding that employment agreements may contain clauses that prevent employees from banding together to sue their employer.

Monday’s decision, written by Justice Neil Gorsuch and handed down Monday, resolves three cases before the court, one of which originates from Wisconsin. That case involved Jacob Lewis, a former technical writer who sued medical-software company Verona-based Epic Systems Inc., alleging it had shorted him on his wages.

Monday’s decision means Lewis and the 28 other employees that joined him in the class-action lawsuit will have to individually enter arbitration with Epic.

The decision reverses favorable rulings handed down in Lewis’ case by District Court Judge Barbara Crabb and the 7th Circuit Court of Appeals.

Among the arguments the court rejected was Lewis’ argument that the National Labor Relations Act, read together with the savings clause of the Federal Arbitration Act, rendered the arbitration agreements unenforceable. Lewis’ lawyers specifically pointed to the NLRA’s Section 7, which prohibits employers from preventing employees from engaging in “concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

However, the justices were not persuaded.

“It is this Court’s duty to interpret Congress’s statutes as a harmonious whole rather than at war with one another,” wrote Gorsuch in Monday’s opinion. “And abiding that duty here leads to an unmistakable conclusion. The NLRA secures to employees rights to organize unions and bargain collectively, but it says nothing about how judges and arbitrators must try legal disputes that leave the workplace and enter the courtroom or arbitral forum.”

Justice Ruth Bader Ginsburg wrote a dissenting opinion and was joined by Justices Sonia Sotomayor, Steven Breyer and Elena Kagan.

Justice Clarence Thomas wrote a concurring opinion stating that he agreed with Gorsuch and his three other colleagues and wrote separately to point out that the FAA’s plain language prevented the employees from prevailing because the employees had not argued that the class-action arbitration agreements were improperly made.

The court’s 5-4 decision Monday is in line with its recent decisions upholding arbitration and class-action clauses in consumer contracts. Observers had predicted that the justices would side with employers yet again, immunizing firms from expensive litigation and leaving employees to fend for themselves in employment disputes.

About Erika Strebel, [email protected]

Erika Strebel is the law beat reporter for the Wisconsin Law Journal and a law school student at UW-Madison. She can be reached at 414-225-1825.

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