US Supreme Court Rules Employment Contracts Can Have Waiver of Class Action Clause for Wage/Hour Matters

In Systems Corp v. Lewis, the US Supreme Court ruled, by a vote of 5-4, that in the context of a wage/hour case under the FLSA, employers can include a clause in employment contracts that require employees to arbitrate their disputes individually and to waive the right to resolve those disputes through joint legal proceedings/class actions.

The opinion decided three cases argued together. Each case arose when an employee who had signed an employment agreement that contained an arbitration clause filed suit in federal court, seeking to bring both individual and collective/class action claims in federal court. The majority held that Congress has instructed in the Federal Arbitration Act that arbitration agreements providing for individualized proceedings must be enforced, and neither the Arbitration Act’s Saving Clause nor the National Labor Relations Act suggests otherwise. It should be noted that while the dissenting opinion explicitly argued that this ruling would not apply to other employee causes of action such as sexual harassment or discrimination actions, that is not the ruling of the Court.

Bill Mitchell

Marisa Beller