Epic Systems Corp. v. Lewis

The National Labor Relations Act does not overrule the enforcement of individual arbitration agreements under the Federal Arbitration Act.

This matter addresses a consolidation of three cases in which Respondents (employees) entered into an arbitration agreement with Petitioners (employer) that specified that arbitration would be conducted on an individual basis. Respondents later brought a class action suit in federal court under the Fair Labor Standards Act (FLSA), citing its collective action provision. The Fifth, Seventh, and Ninth Circuit Courts of Appeals sided with Respondents. On appeal, the Supreme Court reversed, holding that individual arbitration agreements are to be enforced under the Federal Arbitration Act (FAA). The Supreme Court reasoned that the FAA’s savings clause “recognizes only defenses that apply to ‘any’ contract” and that agreeing to individual arbitration itself is not a defense. The Supreme Court also points out that the FLSA’s collective bargaining provision does not address arbitration and the FLSA could not have thought to address class actions, as “modern class action” was not recognized until thirty years after FLSA was enacted. Furthermore, the FLSA and FAA have coexisted for decades and if Congress intended the FLSA’s collective bargaining provision to override arbitration agreements, Congress would expressly say that. Finally, the Supreme Court states that employees’ rights to collective bargaining under the FLSA are not weakened by arbitration agreements. REVERSED and REMANDED.