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The U.S. Supreme Court has just handed down one of the most consequential decisions impacting Connecticut employers since the 1930s.

In a 5-4 decision (Epic Systems v. Lewis), the justices ruled that companies may require workers to accept individual arbitration for wage and other workplace disputes rather than banding together in collective actions.

This decision is expected to effect tens of millions of contracts across the U.S.

It also builds on other recent Supreme Court decisions allowing corporations to require that wage disputes, and perhaps other actions such as job-discrimination claims, be handled through arbitration, rather than litigation.

In 1925, Congress passed the Federal Arbitration Act, which (among other things) provides that agreements to arbitrate disputes “shall be valid, irrevocable, and enforceable.” Eight years later, during the depths of the Great Depression, Congress enacted the National Industrial Recovery Act providing for collective bargaining. In 1935, the Congress also enacted the National Labor Relations Act, which makes clear that employees have the right to work together for “mutual aid and protection.”

In its decision, the Court considered the relevance of each of those laws.

Justice Gorsuch, delivering the opinion for the conservative majority on the court, asked this general question: Should employers be allowed to insist that disputes be handled in one-on-one arbitration, or should employees always be permitted to bring their claims in class or collective actions?

“As a matter of policy these questions are surely debatable,” Gorsuch wrote. “But as a matter of law the answer is clear. In the Federal Arbitration Act, Congress has instructed federal courts to enforce arbitration agreements according to their terms — including terms providing for individualized proceedings…  Congress has instructed that arbitration agreements like those before us must be enforced as written.”

Justice Ruth Bader Ginsburg, writing for the minority, strongly objected to the decision, stating: “The court today holds enforceable (these) arm-twisted, take-it-or-leave-it contracts — including the provisions requiring employees to litigate wage and hours claims only one-by-one… Federal labor law does not countenance such isolation of employees.”

If you are an employer in Connecticut and have questions about labor and employment law, contact the attorneys at Kainen, Escalera & McHale.  Each of us has over 20 years of experience in all aspects of employment and labor law and can help you with this complicated topic.  Please call us if we can help you.  

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