May 21, 2018, 12:51 PM ET

Supreme Court rules employers can block class action lawsuits in win for businesses

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The Supreme Court ruled Monday that businesses can force employees to resolve disputes outside the court system, blocking potential class-action lawsuits in a victory for business interests.

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The case challenged provisions in employee contracts called arbitration agreements in which employees agree that if there is a dispute between them and an employer they will resolve it without filing a lawsuit.

The court voted 5-4 that those agreements are legal, with the more liberal justices signing on to the dissent, saying that the decision will likely lead to less enforcement of minimum wage or anti-discrimination laws.

PHOTO: In this file photo, Supreme Court Associate Justice Neil Gorsuch, June 1, 2017, is seen during an official group portrait at the Supreme Court Building in Washington, D.C.J. Scott Applewhite/AP, FILE
In this file photo, Supreme Court Associate Justice Neil Gorsuch, June 1, 2017, is seen during an official group portrait at the Supreme Court Building in Washington, D.C.

ABC News Supreme Court contributor Kate Shaw said that at issue in this case were claims about overtime pay that were often too small to be worth pursuing alone but are more likely to be successful if they're brought as class action cases. The employers, on the other hand, sought to enforce provisions of employee contracts that require individual arbitration and bar workers from filing class-action lawsuits.

"In essence, there are two main statutes here: the Federal Arbitration Act, or FAA, and the National Labor Relations Act, or NLRA," Shaw said. "The Court had to decide how they worked together - the FAA is designed to protect arbitration as an alternative to litigation, and the NLRA is designed to protect workers. Here the five-justice conservative majority essentially decided that the FAA controlled – that it allowed employers to include in their employment agreements language that required individual arbitration and prohibited collective action, regardless of the NLRA."

Justice Neil Gorsuch wrote in the decision that the law as written says that arbitration agreements are legal and must be enforced.

"The policy may be debatable but the law is clear: Congress has instructed that arbitration agreements like those before us must be enforced as written."

Gorsuch wrote that the employees challenging arbitration agreements did not prove that the agreements violated federal law.

"They object to their agreements precisely because they require individualized arbitration proceedings instead of class or collective ones," they said in the decision.

Justice Ruth Bader Ginsberg wrote in dissent that the court's decision was "egregiously wrong," writing that extreme imbalance was once prevalent in the workplace and that federal law like the National Labor Relations Act was meant to place employers and employees on a more equal footing.

"The inevitable result of today's decision will be the underenforcement of federal and state statutes designed to advance the well-being of vulnerable workers, Ginsberg said.

She wrote that the decision that employees who want to dispute their wages with their employer have to use arbitration does not come from federal law but is the result "take-it-or-leave-it" labor contracts similar to those that block employees from joining a union and that suppress the right of workers to take legal action.

Shaw said it's unclear how the decision would affect disputes related to issues like sexual harassment, which have garnered more attention since the #MeToo movement.

News - Supreme Court rules employers can block class action lawsuits in win for businesses

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CComments

  • ROBOTIX JONES

    Welcome to the Corporate States of America, where we slave endlessly to make the rich richer.

  • dan

    There is NOTHING about the working American he gives a 🐀 ass about.

  • dan

    If anyone bothers to look through the history of my posts they will find I predicted Trump would attack personal rights, employee rights, consumer rights and the environment. I have been proven correct! On all counts!!!

  • Bud Dinski

    Now that business can basically act with impunity concerning their employees, the money they save will go to the C suite and stock owners. So unless you are part of the C suite, best buy stock.

  • Simplythefactsmam

    Arbitration should have to be agreed upon fairly or the employee has the right to sue.

  • Fred

    the fix is in, big buisness wrote a big check.

  • TexasVulcan

    I hope Congress will eventually make sure that these kinds of employment provisions are declared illegal. Taking away someone's rights is not correct.

  • jdj

    Correct ruling. Good to see cases being ruled on correctly.

  • Pondering It

    It's a sound ruling. The dissent from the liberal justices focuses on why they don't like the potential effects of the law - but that's for Congress to worry about. The majority opinion correctly applies the existing laws and invites Congress to change those laws if they want the system to operate differently.

    Isn't that exactly what justices are supposed to do?

  • Pingy

    So in other words, if you want the job you either sign the arbitration agreement or you don't, and then when you do and your employer breaks federal wage laws by not paying you overtime, then you have to take what they give you, which may be to tell you to go suck on an egg.

  • conservativeprof

    Excellent decision and reasoning by the court majority. If Congress does not like this decision, a new law should be passed. Thank you President Trump for appointing a new judge who focuses on strict interpretation of the law.

  • Fatesrider

    The U.S. got rid of slavery, but not the mindset of the slave owners.

  • Sarah Levine

    Or in other words the rich will continue to get richer, the working class more impoverished and less of a voice but keeping voting Trump and the GOP people. Time for term limits all around including the Supreme Court. Face it, liberal or conservative, the justices just twist their legal views to fit their own personal views.

  • snake

    This is a huge win for employers. They are now free to cheat their employees with no consequences other than arbitration that pits a single employee against a company and it's lawyers. No employee can afford to hire an attorney to pursue a single claim for being cheated out of wages or benefits.

  • A Friend

    Gorsuch wrote that the “policy may be debatable but the law is clear: Congress has instructed that arbitration agreements like those before us must be enforced as written. While Congress is of course always free to amend this judgment, we see nothing suggesting it did so in the” National Labor Relations Act, “much less that it manifested a clear intention to displace the Arbitration Act.”
    Their job is to interpret the law, not make it. Making law is up to the legislative branch.

  • Citislicker

    How refreshing. The SCOTUS ruling that the law must be followed as written.

  • SouthernCT

    They interpreted the law as it is written. Time for congress to make a change.

  • whitepine

    I have lost respect for the Supreme Court protecting the common man. They are letting big businesses take over our government.

  • Colinalcarz

    RBG expressed it perfectly. The market might currently favor employees, but employers are clearly being handed a free license to exploit and abuse with this ruling.

  • pete mancini

    This is their job , To help millionaires get richer, And the workers get poorer.