On May 21, 2018, the United States Supreme Court issued its decision in Epic Systems Corp. v. Lewis, holding that waivers of class and collective actions in arbitration agreements are enforceable under the Federal Arbitration Act (FAA). The Supreme Court’s decision resolves a circuit split that has been brewing for several years on whether such waivers contained in predispute employment arbitration agreements violate the National Labor Relations Act (NLRA) by preventing employees from acting in concert to pursue claims against their employers. Writing for the majority in a 5-4 decision, Justice Neil Gorsuch found that arbitration agreements requiring employees to arbitrate their claims individually are enforceable under the FAA and the NLRA.

This decision marks a significant win for employers who have arbitration agreements with these waivers, as it reduces their risk of having to litigate employment claims on a class and collective basis. Although these waivers are now enforceable, employers must still review their arbitration agreements and programs to ensure they are carefully crafted to avoid contractual challenges, such as finding the agreements are unconscionable, and be mindful that not all class claims will be covered. Employers who do not currently use predispute arbitration agreements should consider whether it makes sense for them to adopt such agreements in light of this ruling.