Legal Review: Supreme Court to Allow Companies to Prevent Class Action Lawsuits

By Memphis employment lawyer Jon Street of The Employment Law Group.

The Supreme Court issued a ruling late in May regarding the use of clauses in employment contracts that would prevent workers from joining together to file a class action lawsuit against their employer. The vote passed by a count of 5-4 and the ruling could very well affect 25 million employment contracts.

Justice Neil M. Gorsuch wrote for the majority, saying that if employees were permitted to join together to file claims, “the virtues Congress originally saw in arbitration, its speed and simplicity and inexpensiveness, would be shorn away and arbitration would wind up looking like the litigation it was meant to displace.”

Writing for the dissenting justices was Justice Ruth Bader Ginsburg. In her writing, Justice Ginsburg said that the decision will cause “huge under-enforcement of federal and state statutes designed to advance the well-being of vulnerable workers.”

The others who voted in the majority included Chief Justice John G. Roberts Jr., Justice Samuel A. Alito Jr., Justice Clarence Thomas and Justice Anthony M. Kennedy.

A brief in support of the employees was submitted by the Obama Administration, representing the National Labor Relations Board. The Trump Administration submitted the brief on behalf of the employers. The general counsel for the labor board argued in favor of the employees.

There were three separate cases that were resolved when the Supreme Court issued its ruling in May. Those cases involved claims that companies were underpaying their employees. The employment contracts for the workers stated that these disputes needed to be solved using arbitration instead of in the court system. The contracts also noted that the employees were to file their cases individually.

“Employment law issues include wage and hour, workers’ compensation, workplace discrimination and various other issues,” Jon Street, of The Employment Law Group, said. “Understanding the laws governing employment is an important part of being in the professional world.”

In all three of the cases that were ruled on by the Supreme Court in May the employees said that the National Labor Relations Act is a law that protects their rights to enter concerted activities and that it bans class waivers. This argument was accepted by federal appeals courts in San Francisco and Chicago but was rejected by a federal appeals court in New Orleans.