The Supreme Court ruled Monday that employers can include clauses in employment contracts that require employees to settle disputes individually with a third-party arbitrator.
In a 5-4 ruling, the justices said arbitration agreements, which bar employees from joining together in arbitration or a class-action lawsuit to settle disputes are enforceable under the Federal Arbitration Act. Legislation to ensure arbitration agreements between Missouri employers and at-will employees are enforced was introduced and supported by Associated Industries of Missouri, but did not pass in the legislative session that ended Friday, May 18.
“We are pleased the U.S. Supreme Court has affirmed enforcement of arbitration agreements in the employment setting,” said Ray McCarty, president and CEO of Associated Industries of Missouri.
Justice Neil Gorsuch said in delivering the opinion of the court that the employees challenging the agreements mistakenly claimed the National Labor Relations Act (NLRA) overrides the Federal Arbitration Act and renders the agreements unlawful.
“The policy may be debatable but the law is clear: Congress has instructed that arbitration agreements like those before us must be enforced as written,” he wrote.
“While Congress is of course always free to amend this judgment, we see nothing suggesting it did so in the NLRA — much less that it manifested a clear intention to displace the Arbitration Act.”
NLRA gives workers the right to organizes union and bargain collectively, but Gorsuch said it does not confer a right for employees to join class or collective actions in court or in arbitration.
“It does not even mention class or collective action procedures,” he said. “It does not even hint at a wish to displace the Arbitration Act — let alone accomplish that much clearly and manifestly, as out precedents demand.”