Supreme Court Upholds Arbitration Agreements Barring Class Actions by Employees

  • Post-acute care and senior living employers should consider the use of arbitration agreements that specifically require employment disputes to be resolved via one-on-one arbitration as opposed to class or collective actions
  • Supreme Court rules that arbitration agreements requiring one-on-one arbitration of employment disputes (as opposed to class or collective actions) are enforceable
  • This is the latest in a series of victories for arbitration agreements affecting post-acute care and senior living providers

Supreme Court Upholds Arbitration Agreements Barring Class Actions by EmployeesOn May 21, the United States Supreme Court issued an important decision in Epic Systems Corp. v. Lewis upholding the enforceability of agreements between employers and employees to resolve employment disputes via one-on-one arbitration rather than via class or collective actions.

In an opinion by Justice Neil Gorsuch, the Court rejected recent attempts by trial lawyers, the National Labor Relations Board (NLRB), and some federal courts to erode Congress’s dictates in the Federal Arbitration Act (FAA) that require courts to enforce the terms of arbitration agreements as written. The Court’s decision is a victory for the policies underlying the FAA that favor informal, streamlined proceedings over slower, more costly litigation.

For post-acute and senior living providers, the Court’s decision is the latest in a series of important victories relating to the use of arbitration agreements. Last year, in a case involving an arbitration agreement between a nursing home and a resident that was signed by the resident’s attorney-in-fact, the Supreme Court held that it was not necessary for the resident’s power-of-attorney document to specify the attorney-in-fact’s permission to sign arbitration agreements in order for the arbitration agreement to be enforceable. Also last year, the Centers for Medicare and Medicaid Services (CMS) announced their proposal to reverse a rule (which had yet to go into effect due to a court-ordered injunction) that would have prohibited nursing homes from offering pre-dispute arbitration agreements to prospective residents upon admission.

While many providers are aware of the benefits of including arbitration agreements in their resident admission materials, the Court’s recent decision should spur them to consider the benefits of arbitration agreements in the employment context as well. Employers should especially consider the use of arbitration agreements that specifically require employment disputes to be resolved via one-on-one arbitration as opposed to class or collective actions. If properly drafted and put in place, such agreements enable employers to avoid costly and time-consuming class-action litigation that is often driven by the windfall available to class-action plaintiffs’ attorneys.

If you do not currently have arbitration agreements in place with your employees, now is an excellent time to consider implementing them as many other providers in the industry have done. If you do already have such agreements in place, it is equally important that you have them reviewed by an employment attorney in light of the Supreme Court’s recent decision to ensure that they are enforceable and effectively drafted to help prevent employment disputes from becoming class and collective actions.

ROLF attorneys are available to answer any questions you may have and are ready to assist you either in drafting and implementing new arbitration agreements or in reviewing your existing arbitration agreements.

Please note that this post is intended to be informational only, and is not intended to be nor should it be relied upon as legal advice.  Rolf Goffman Martin Lang LLP will not be responsible for any actions taken or arrangements structured based upon this post.  The receipt or review of this post by an organization that is not a current client of Rolf Goffman Martin Lang LLP does not create an attorney-client relationship between the recipient and the law firm.

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