The big opinions keep coming down, and this one (Epic Systems Corp. v. Lewis, 584 U.S. ___, U.S. Supreme Ct. no. 16-285 (May 21, 2018)) (slip opinion linked here) is as big as it gets.
The short of it: employment arbitration agreements can legally prohibit employees from being able to bring class actions, collective actions, and any other type of action other than an individual action in arbitration. Employees who sign such agreements may be bound to have their disputes adjudicated in private arbitration and solely on an individual basis.
Bases for the holding:
- The savings clause of the Federal Arbitration Act, which allows courts to refuse to enforce arbitration agreements "upon such grounds as exist at law or in equity for the revocation of any contract," recognizes only " ‘generally applicable contract defenses, such as fraud, duress, or unconscionability" and not defenses "interfer[ing] with fundamental attributes of arbitration." And, according to the majority, requiring "individualized arbitration instead of class or collective proceedings" interferes with a fundamental attribute of arbitration.
- Section 7 of the National Labor Relations Act (which protects the right of employees to "engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection") and similar language in the Norris-LaGuardia Act only protects conduct in connection with exercising the "right to free association in the workplace" and does not protect the ability of employees to pursue class or collective actions.
Additionally, the Supreme Court interpreted Section 7 of the NLRA to protect only the right of employees to engage in concerted activities in connection with union-related matters, collective bargaining, and "things employees 'just do' for themselves in the course of exercising their right to free association in the workplace." Slip op. at 12.
Justice Goruch authored the majority opinion, joined by, as you might have guessed, Justices Roberts, Kennedy, Thomas (who also filed a concurring opinion), and Alito.
Justice Ginsburg filed a dissenting opinion, joined by Breyer, Sotomayor, and Kagan. The crux of the dissent is that section 7 of the NLRA's protection of employees's rights to "engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection" (29 U.S.C. § 157 (emphasis added)) must guarantee and protect more than just the right to form or join labor organizations or bargain collectively; because the right to form and join unions and collectively bargain was expressly listed, the additional reference to "other concerted activities" must mean something broader and beyond merely forming and joining a union---namely, banding together to file a lawsuit. See slip op. at 39 (dissenting opinion at 8).
Suits to enforce workplace rights collectively fit comfortably under the umbrella “concerted activities for the purpose of . . . mutual aid or protection.” 29 U. S. C. §157. “Concerted” means “[p]lanned or accomplished together; combined.” American Heritage Dictionary 381 (5th ed. 2011). “Mutual” means “reciprocal.” Id., at 1163. When employees meet the requirements for litigation of shared legal claims in joint, collective, and class proceedings, the litigation of their claims is undoubtedly “accomplished together.” By joining hands in litigation, workers can spread the costs of litigation and reduce the risk of employer retaliation. See infra, at 27–28.
Recognizing employees’ right to engage in collective employment litigation and shielding that right from employer blockage are firmly rooted in the NLRA’s design. Congress expressed its intent, when it enacted the NLRA, to “protec[t] the exercise by workers of full freedom of association,” thereby remedying “[t]he inequality of bargaining power” workers faced. 29 U. S. C. §151; see, e.g., Eastex, Inc. v. NLRB, 437 U. S. 556, 567 (1978) (the Act’s policy is “to protect the right of workers to act together to better their working conditions” (internal quotation marks omitted)); City Disposal, 465 U. S., at 835 (“[I]n enacting §7 of the NLRA, Congress sought generally to equalize the bargaining power of the employee with that of his employer by allowing employees to band together in confronting an employer regarding the terms and conditions of their employment.”). See also supra, at 5–6. There can be no serious doubt that collective litigation is one way workers may associate with one another to improve their lot.
Id. at 40 (dissenting opinion at 9).
Justice Ginsburg goes on to list multiple ways in which the protection of "concerted activities" has been applied by the courts to protect conduct broader than union activities, e.g., "concerted appeals to the media," legislative bodies, and more. See id. at 40-41 (dissenting opinion at 9-10). And Justice Ginsburg goes on to cite not only the National Labor Relations Board's interpretation, but also multiple court opinions holding that group action in litigation is a concerted activity protected under the NLRA:
Crucially important here, for over 75 years, the Board has held that the NLRA safeguards employees from employer interference when they pursue joint, collective, and class suits related to the terms and conditions of their employment. See, e.g., Spandsco Oil and Royalty Co., 42 N. L. R. B. 942, 948–949 (1942) (three employees’ joint filing of FLSA suit ranked as concerted activity protected by the NLRA); Poultrymen’s Service Corp., 41 N. L. R. B. 444, 460–463, and n. 28 (1942) (same with respect to employee’s filing of FLSA suit on behalf of himself and others similarly situated), enf’d, 138 F. 2d 204 (CA3 1943); Sarkes Tarzian, Inc., 149 N. L. R. B. 147, 149, 153 (1964) (same with respect to employees’ filing class libel suit); United Parcel Service, Inc., 252 N. L. R. B. 1015, 1018 (1980) (same with respect to employee’s filing class action regarding break times), enf’d, 677 F. 2d 421 (CA6 1982); Harco Trucking, LLC, 344 N. L. R. B. 478, 478–479 (2005) (same with respect to employee’s maintaining class action regarding wages). For decades, federal courts have endorsed the Board’s view, comprehending that “the filing of a labor related civil action by a group of employees is ordinarily a concerted activity protected by §7.” Leviton Mfg. Co. v. NLRB, 486 F. 2d 686, 689 (CA1 1973); see, e.g., Brady v. National Football League, 644 F. 3d 661, 673 (CA8 2011) (similar).[n.5] The Court pays scant heed to this longstanding line of decisions.[n.6]
[n.5] The Court cites, as purported evidence of contrary agency precedent, a 2010 “Guideline Memorandum” that the NLRB’s then-General Counsel issued to his staff. See ante, at 4, 19, 22. The General Counsel appeared to conclude that employees have a §7 right to file collective suits, but that employers can nonetheless require employees to sign arbitration agreements waiving the right to maintain such suits. See Memorandum GC 10–06, p. 7 (June 16, 2010). The memorandum sought to address what the General Counsel viewed as tension between longstanding precedent recognizing a §7 right to pursue collective employment litigation and more recent court decisions broadly construing the FAA. The memorandum did not bind the Board, and the Board never adopted the memorandum’s position as its own. See D. R. Horton, 357 N. L. R. B. 2277, 2282 (2012), enf. denied in relevant part, 737 F. 3d 344 (CA5 2013); Tr. of Oral Arg. 41. Indeed, shortly after the General Counsel issued the memorandum, the Board rejected its analysis, finding that it conflicted with Board precedent, rested on erroneous factual premises, “defie[d] logic,” and was internally incoherent. D. R. Horton, 357 N. L. R. B., at 2282–2283.
[n.6] In 2012, the Board held that employer-imposed contracts barring group litigation in any forum—arbitral or judicial—are unlawful. D. R. Horton, 357 N. L. R. B. 2277. In so ruling, the Board simply applied its precedents recognizing that (1) employees have a §7 right to engage in collective employment litigation and (2) employers cannot lawfully require employees to sign away their §7 rights. See id., at 2278, 2280. It broke no new ground. But cf. ante, at 2, 19.
Id. at 41-42 (dissenting opinion at 10-11) (footnotes omitted).
Beyond genuine dispute, an employer “interfere[s] with” and “restrain[s]” employees in the exercise of their §7 rights by mandating that they prospectively renounce those rights in individual employment agreements.8 The law could hardly be otherwise: Employees’ rights to band together to meet their employers’ superior strength would be worth precious little if employers could condition employment on workers signing away those rights.
Id. at 48 (dissenting opinion at 10-11) (footnote and citation omitted).
There's a lot more here. I encourage you to read this very important opinion if you'd like to delve into the reasoning of the majority and the dissenting opinions, the history of the statutes, etc.
But the result is clear: employers may require employees, as a condition of employment, to waive their ability to bring civil actions except in the form of one-on-one private arbitrations. Employers may prohibit employees from availing themselves of class, collective, or other joint action, even in arbitration (the employees in the case did not seek to avoid arbitration altogether but merely wanted to pursue collective actions under the Fair Labor Standards Act, even if in arbitration).