On May 21st, 2018, the Supreme Court of the United States in Epic Systems Corp. v. Lewis (“Epic Systems”) held in a 5-4 majority that one-on-one mandatory arbitration agreements imposed by employers upon their employees must be enforced as written in accordance with the Federal Arbitration Act (“FAA”). The majority opinion, written by Justice Neil Gorsuch, reasoned that the FAA superseded the federal right of employees to bring claims in class or collective actions contained in the National Labor Relations Act (“NLRA”) and the Fair Labor Standards Act (“FLSA”).

Enacted in 1935 during U.S. President Franklin D. Roosevelt’s New Deal Era, the NLRA established a “‘fundamental right’ [of employees] to join together to advance their common interests”. The rationale was that by permitting workers to collectively confront employers with respect to the conditions of their employment, they would “gain strength […] in numbers” and avoid the threat of retaliation. Low-value minimum-wage and overtime claims could thus be brought on a collective level to equalize the employer-employee power imbalance, allowing employees to be an adequate match for the much stronger employers.

However, in recent years, the imposition of mandatory arbitration agreements by employers upon their employees has drastically risen, affecting over 50% of non-unionized companies in the United States (as opposed to 2% in 1992). According to Justice Ruth Bader Ginsburg, who criticized the Epic Systems majority decision as “egregiously wrong” in a scathing dissent, this exponential growth of individualized employer-imposed arbitration is a direct result of recent Supreme Court jurisprudence which has rendered “the cost-benefit balance of underpaying workers […] heavily in favor of [employers] skirting [their] legal obligations”.