Supreme Court Rescues the Collective Action Waiver in Employee Arbitration Agreements - Epic Systems v. Lewis resolves a circuit split.

by Pillsbury Winthrop Shaw Pittman LLP

Pillsbury Winthrop Shaw Pittman LLP


  • The U.S. Supreme Court held that arbitration agreements governed by the Federal Arbitration Act (FAA) may lawfully prohibit collective and class actions in employment disputes.
  • State laws, such as the California Private Attorney General’s Act, still allow for collective actions that cannot be superseded by a private agreement between an employer and an employee.
  • There is legislative activity at both the state and federal level to limit the scope and enforcement of arbitration agreements arising from the employment relationship.

In Epic Systems v. Lewis, the Supreme Court narrowly upheld the enforceability of pre-dispute arbitration agreements that require employees to bring employment claims individually instead of collectively. In a win for employers, the Court ruled on May 21 that the NLRA’s protection of employees’ right to engage in “concerted activities for … mutual aid or protection” did not extend to class or collective actions. The FAA therefore mandates that courts enforce such arbitration agreements as written.

This decision resolves a circuit split that evolved when the National Labor Relations Board (NLRB) during the Obama administration took the position that class action waivers violated the National Labor Relations Act (NLRA). The NLRA generally protects all U.S. non-supervisory employees, even non-unionized employees, who work in interstate commerce. Before the Supreme Court were three Circuit decisions, two of which agreed with the NLRB’s position and refused to uphold the class action waiver in a pre-dispute arbitration agreement. Each of the cases involved complaints by employees that they were underpaid in violation of the Fair Labor Standards Act and analogous state laws.

The 7th Circuit had held that such arbitration agreements violated the NLRA and were unenforceable under the FAA. The lower court found that “other concerted activities” had long been held to include resort to administrative and judicial forums, and thus rendered such collective action waivers illegal. And while the FAA mandates the enforcement of arbitration agreements, the FAA states that such agreements are enforceable “save upon such grounds as exist at law or in equity for the revocation of any contract.” The “saving clause” applies in this case, said the court: “Because the NLRA renders Epic’s arbitration provision illegal, the FAA does not mandate its enforcement.”

Agreeing with 7th Circuit, the 9th Circuit explained that the problem had nothing to do with arbitration, but with the ban on collective action in any forum: “It would equally violate the NLRA for [the employer] to require its employees to sign a contract requiring the resolution of all work-related disputes in court and in ‘separate proceedings.’” The FAA’s saving clause, therefore, allows the illegal term to be severed from the arbitration agreement. The 9th Circuit emphasized that Section 7 of the NLRA conveys a substantive right to collective action, not a procedural one, and that substantive rights cannot be waived in arbitration agreements. “[W]hen an arbitration contract professes to waive a substantive federal right, the saving clause of the FAA prevents the enforcement of that waiver.”

The Supreme Court circumvented the reasoning of these circuit courts by finding that the NLRA does not provide a right to class or collective action in the first place, adopting the 5th Circuit’s position on the matter. “The NLRA secures to employees rights to organize unions and bargain collectively,” declared Justice Gorsuch, “but it says nothing about how judges and arbitrators must try legal disputes that leave the workplace and enter the courtroom or arbitral forum.” There is no issue, then, with enforcing an arbitration agreement under the FAA that requires employees to act individually in court or arbitration.

Concepcion Expanded, FAA Augmented Again
Addressing the parties’ illegality argument, the Court declared that, even if the NLRA rendered class and collective action waivers illegal, the FAA’s saving clause would offer no refuge. Applying its holding in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), the Court explained that the saving clause renders no aid to “defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue.” The saving clause does not save defenses that “interfer[e] with fundamental attributes of arbitration.” Justice Gorsuch explains, “[The employees] don’t suggest that their arbitration agreements were extracted, say, by an act of fraud or duress or in some other unconscionable way that would render any contract unenforceable. Instead, they object to their agreements precisely because they require individualized arbitration proceedings instead of class or collective ones. And by attacking (only) the individualized nature of the arbitration proceedings, the employees’ argument seeks to interfere with one of arbitration’s fundamental attributes.”

Writing for the four dissenters, Justice Ginsburg proposed a distinction between the unconscionability defense at issue in Concepcion and the illegality defense in Epic Systems. The saving clause would apply here, she wrote, because, unlike in Concepcion, “the Court is not asked to apply a generally applicable contract defense to generate a rule discriminating against arbitration.” The NLRA requires invalidation of all employer-imposed class waivers, irrespective of forum. “By declining to enforce those adhesive waivers, courts would place them on the same footing as any other contract provision incompatible with controlling federal law.”

The majority acknowledged that Congress can and does statutorily limit the FAA without amending the FAA itself, but fundamentally disagreed with the dissent on the breadth of the saving clause. It is clear from both Concepcion and Epic Systems that the Court views arbitration as having an “individualized nature” which is protected by the FAA. The saving clause will not empower a contract defense aimed thereto, “whether it sounds in illegality or unconscionability.” The Court continues to take an expansive view of the FAA’s enforceability provisions and a narrow view of its saving clause, a good result for employers as long as this jurisprudential trend does not lead to a major legislative overhaul. For now, the “liberal federal policy favoring arbitration agreements” is more pronounced than ever.

No Effect on PAGA
Even though employers can now be confident in the enforceability of class waivers in arbitration clauses, California employers still must contend with collective employee actions under the Private Attorney General Act (PAGA). Epic Systems has no apparent effect on the California Supreme Court’s 2014 ruling in Iskanian v. CLS Transp. L.A., LLC, 59 Cal.4th 348 (2014) that the FAA has no preemptive effect on PAGA because the FAA’s purpose is specific to the resolution of private disputes, and a PAGA claim is by nature a dispute between an employer and the state. SCOTUS declined to review Iskanian.

Under PAGA, an aggrieved employee may file a lawsuit as a proxy of the state’s labor law enforcement agencies and seek civil penalties for Labor Code violations on behalf of herself, other employees and the state. California courts have held that arbitration clauses in employment agreements do not govern PAGA disputes because the state is the real party in interest in such proceedings, and the state is not a party to the arbitration agreement. However, the state high court has granted review in Lawson v. ZB, N.A., S246711 (2018) in which it will decide if a representative action under PAGA that seeks recovery of individualized lost wages as civil penalties under Labor Code section 558 falls within the preemptive scope of the FAA and is therefore subject to any arbitration agreements to which the employees are party. Even if the court decides in the affirmative, however, the decision would do nothing to limit the collective nature of the claims, only the forum in which they are heard, and only regarding claims for individualized lost wages.

Congressional Efforts to Amend the Arbitration Landscape
Two bills are pending in Congress aimed at amending the FAA. The first is entitled “Ending Forced Arbitration of Sexual Harassment Act” (S.2203), which would render unenforceable predispute agreements requiring arbitration of a dispute arising from conduct that would form the basis of a claim based on sex under title VII of the Civil Rights Act of 1964—notably including workplace sexual harassment. The bill currently has bipartisan support, and is in committee. Related bills in the House are also in committee.

The second bill, the “Arbitration Fairness Act of 2018” (S.2591), would explicitly roll back Supreme Court jurisprudence on the FAA. It declares that the FAA was intended to apply to commercial disputes between entities of similar sophistication and bargaining power, and that the broad scope the statute currently enjoys is counter to Congressional intent. The bill would render unenforceable predispute agreements requiring arbitration of employment, consumer, antitrust and civil rights disputes. Although the bill has broad support among Democrats, political analysts opine that it does not have sufficient support to become law under the current Congress and White House.

Next Steps for Employers
Although there are ongoing efforts on both the state and federal level to limit the impact and effect of class action waivers in arbitration agreements, under current law most employers would be well advised to implement an arbitration agreement that includes a class action waiver with its employees. While there are certain disadvantages to arbitration—such as limited appeal rights and, by way of example, in California, the employer’s obligation to pay for the additional costs of arbitration—most employers would prefer to litigate matters in an arbitral forum than in court. Now that class action waivers are clearly enforceable, there is even a greater benefit for most employers to make agreements to arbitrate a standard part of their employment contracts.

The Supreme Court may soon decide, however, that such a clause is not necessary to prohibit collective action in an arbitral setting. In Lamps Plus Inc. v. Varela, No. 17-988, the Court has agreed to consider whether an arbitration agreement silent on the issue allows an employee to bring a collective arbitration action. Due to the Court’s insistence that a “fundamental attribute” of arbitration is its “individualized nature,” the reasonable judicial prognosticator would predict another win for employers before long.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Pillsbury Winthrop Shaw Pittman LLP | Attorney Advertising

Written by:

Pillsbury Winthrop Shaw Pittman LLP

Pillsbury Winthrop Shaw Pittman LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.