Supreme Court Ruling Affects Collective and Class Employment Actions in New Jersey

team-motivation-teamwork-together-386673Class actions and collective actions allow numerous individuals with similar claims to bring a single lawsuit against a common defendant, rather than hundreds or thousands of individual lawsuits. A New Jersey employee, for example, could file a collective action on behalf of themselves “or other employees similarly situated” for violations of state minimum wage law. See N.J. Rev. Stat. § 34:11-56a25. This offers many benefits for plaintiffs, particularly in situations where the cost of filing suit individually, when compared to the potential recovery, would make it too expensive to assert one’s legal rights. One could also argue that class actions help defendants by consolidating all claims against them into a single lawsuit, rather than hundreds or thousands of lawsuits. That is not how employers and other defendants usually see class actions, however, and they frequently argue against allowing employees to pool their claims in a single lawsuit. The U.S. Supreme Court recently sided with employers regarding collective arbitration, similar to collective or class actions. Epic Systems Corp. v. Lewis, 584 U.S. ___ (2018).

The ruling in Epic Systems arose from a conflict between two federal statutes: the Federal Arbitration Act (FAA) of 1925, 9 U.S.C. § 1 et seq.; and the National Labor Relations Act (NLRA) of 1935, 29 U.S.C. § 151 et seq. The FAA generally states that arbitration clauses in written contracts “involving commerce” are “valid, irrevocable, and enforceable.” 9 U.S.C. § 2. Courts have authority to order parties to such a contract to participate in arbitration, and to enforce the recommendations of the arbitrators. A court may only vacate or modify an arbitration award on grounds specified by the statute. See id. at §§ 10, 11. The Supreme Court held that the FAA applies to contracts executed under both state and federal law in Southland Corp. v. Keating, 465 U.S. 1 (1984).

The NLRA protects the rights of workers to organize for the purpose of collective bargaining—i.e. to form or join labor unions—and “to engage in other concerted activities for” those purposes. 29 U.S.C. § 157. It is an “unfair labor practice” for employers to “interfere with” or “restrain” employers engaged in these protected activities. Id. at § 158(a)(1). Courts have given rather broad interpretation to the meaning of “concerted activities.” The question in Epic Systems concerned whether collective arbitration was a “concerted activity” protected by the NLRA, or whether the FAA required enforcement of arbitration clauses in individual employment contracts.

The Epic Systems case was a consolidation of three cases that reached conflicting rulings about the FAA and the NLRA. Some courts had ruled that the “saving clause” in the FAA, 9 U.S.C. § 2, allowed the “concerted activities” provisions of the NLRA to control, meaning that employees could demand collective arbitration regardless of waivers in their employment contracts. The Supreme Court rejected this view in a 5-4 opinion.

Writing for the majority, Justice Gorsuch treated employment contracts as the result of bargaining between two equal parties. Justice Ginsberg’s dissent characterized these contracts as “ take-it-or-leave-it arbitration agreements,” Epic Systems, slip op. at 7 (Ginsberg, J., dissenting). She further described the collective arbitration waivers as “arm-twisted.” Id. at 18 n. 9.

The employment attorneys at the Resnick Law Group’s are available to help you if you are involved in a dispute with an employer in New Jersey or New York. Please contact us online, at 973-781-1204, or at (646) 867-7997 today to schedule a confidential consultation with a member of our skilled and experienced team.

More Blog Posts:

Supreme Court to Consider Whether Class Action Waivers Are Enforceable in Employment Disputes, The New Jersey Employment Law Firm Blog, April 5, 2017

New Jersey Appellate Court Invalidates Arbitration Clause in Employee Handbook, The New Jersey Employment Law Firm Blog, April 1, 2016

New Jersey Appellate Court Rules on Enforceability of Employee Arbitration Agreements, The New Jersey Employment Law Firm Blog, October 27, 2015

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