Supreme Court's Epic Systems Ruling Continues to Limit Class Actions

Author: David B. Weisenfeld, XpertHR Legal Editor

August 17, 2018

The US Supreme Court's May ruling in Epic Systems v. Lewis, that companies may compel their employees to arbitrate workplace disputes individually rather than as part of a class action, is already having a host of implicati ons on other cases.

For instance, earlier this month a federal court in Denver blocked nearly 3,000 Chipotle workers who signed mandatory arbitration agreements from joining a collective Fair Labor Standards Act (FLSA) lawsuit against the restaurant chain.

In upholding the arbitration agreements, US District Judge John Kane ruled that the agreements were enforceable even if the employees did not specifically recall signing them. The court ruled that the agreement was available to the employees during the onboarding process, and that they had seven days to review it.

The employees had argued that Chipotle's use of an electronic link to a digital version of the arbitration agreement accessible within its onboarding system was comparable to "hiding the agreement in fine print." But in rejecting that argument, the court explained, "Unlike 'fine print' that makes an arbitration agreement nearly impossible to read, the Arbitration Agreement here was written in standard font and clearly labeled as 'Agreement to Arbitrate.'"

6th Circuit Joins the Fray

The Cincinnati, Ohio-based 6th Circuit Court of Appeals ruled along similar lines on August 15, in Gaffers v. Kelly Services, Inc., finding that the FLSA does not bar agreements stating that individual arbitration is the only permissible forum for employment claims. The decision reversed a lower court's holding in favor of the employees.

The workers had complained that the outsourcing and consulting firm Kelly Services did not pay them overtime for time they spent logging on and off their work computers. And, although they won conditional certification of their class, the 6th Circuit panel concluded that the FLSA does not require the employees to vindicate their rights in a collective action, nor does it contain any provision that would invalidate arbitration agreements requiring one-on-one arbitration.

The Supreme Court's Epic Systems ruling involved claims brought under the National Labor Relations Act (NLRA) that employment arbitration agreements were illegal because they denied employees the right to engage in "concerted activities" for their mutual aid and protection since they were prohibited from arbitrating collectively.

But the Court held that while the NLRA safeguards employees' rights to organize unions and bargain collectively, it says nothing about how judges and arbitrators must try legal disputes.

In a recent XpertHR webinar, Proskauer Rose employment attorney Anthony Oncidi predicted that the Supreme Court's pronouncement would extend well beyond the NLRA into all sorts of employment disputes. The 6th Circuit's ruling proves as much, as it applies Epic Systems in the FLSA context.