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Arbitration is an Epic Weapon: Time to Fight Back

As you may have heard, the Supreme Court of the United States (“SCOTUS”) has ruled against the employees in Epic Systems Corp. v. Lewis (584 U.S. ___ 2018). Undoubtedly, this will allow employers to weaponize the Federal Arbitration Act against a growing number of employees. This will require innovative statutory correction at the federal, state, or municipal level, as doing nothing will leave the labor force in an untenable position.

With the proliferation of arbitration agreements, employers have put great effort into unconscionably hindering the ability of employees to act concertedly in court to redress violations of various labor laws, including wage and hour claims. In Epic Systems, these arbitration agreements have now been met with approval by SCOTUS. This harkens back to the Lochner era, a period in SCOTUS jurisprudence in which many statutes that regulated working conditions were deemed unconstitutional, based on the Federal Constitution’s freedom of contract.

Today, millions of employees are required to sign arbitration agreements as a condition of employment, which include class and collective action waivers. These waivers are then used to decimate attempts to remedy widespread labor law violations. Class action lawsuits filed by brave employees who are seeking to serve as class representatives are increasingly compelled into arbitration; a quiet process conducted in the shadows. Resolution is limited only to the individual employees’ claims that filed the lawsuit. After arbitration, the claims of the class, which can include thousands of similarly aggrieved employees, are simply disregarded. According to SCOTUS, the members of these forgotten classes of employees are free to arbitrate their own individual claims; however, how does one arbitrate claims that one does not know exist? Who will apprise these employees of their rights and fight for remedies?

It is time for other states, including New York, to follow California’s lead. Under California’s Private Attorney General Act (“PAGA”), employees have a viable route for bypassing these domineering arbitration agreements. Under this framework, overwhelmed government agencies can delegate certain enforcement powers to aggrieved employees, who can then pursue statutory penalties on behalf of the state, to hold employers accountable for widespread labor law violations, with the assistance of private counsel. If done properly, such representative lawsuits cannot be compelled into arbitration, as the state is not a party to these arbitration agreements. Suit is filed in the name of an agency or governmental official. If more legislative bodies do their part, more employees, who were once denied justice, can find renewed access to the courts, where their claims may actually see the light of day.