On July 31, 2021, House Judiciary Committee Chairman Jerry Nadler (D-NY) and House Education and Labor Committee Chairman Bobby Scott (D-VA), reintroduced the Restoring Justice for Workers Act. At its core, this bill seeks to overrule the 2018 U.S. Supreme Court decision in Epic Systems v. Lewis, 138 S. Ct. 1612 (2018), which held that employers may lawfully require employees to agree, as a condition of employment, to pursue work-related claims in individual arbitrations.
In its 5-4 decision, the Court in Epic Systems ruled that through the Federal Arbitration Act (“FAA”), individual arbitration agreements are enforceable and that neither the saving clause of the FAA nor the National Labor Relations Act (“NLRA”) operates to override that outcome. Justice Gorsuch wrote the majority opinion and was joined by Justices Roberts, Anthony, Kennedy, Thomas and Alito, with Thomas also writing a concurring opinion. In reviewing the intent of Congress in the passage of the NLRA and FAA, the majority reasoned that “Congress has instructed federal courts to enforce arbitration agreements according to their terms – including terms providing for individualized proceedings,” with the intent to create a “liberal federal policy favoring arbitration.” The late Justice Ginsburg wrote the dissenting opinion and was joined by Justices Breyer, Sotomayor, and Kagan. The dissent opined that “[t]he court today holds enforceable this 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.”
The result of Epic Systems is significant for employers and employees alike. Millions of employees nationwide are subject to mandatory employment arbitration. Through these arbitration clauses, many workers are prohibited from seeking redress in state or federal court to enforce statutory rights, such as those promulgated by the Fair Labor Standards Act’s wage and hour protections or Title VII of the Civil Rights Act’s anti-discrimination prohibitions. Employees may also be prohibited from pursuing class or collective legal action and must instead find a venue in an arbitration forum, sometimes in another state or across the country.
As proposed. the Restoring Justice for Workers Act prohibits the use of forced arbitration clauses in employment contracts and prohibits employers from requiring employees to waive their right to engage in joint, class, or collective legal action, essentially undoing Epic Systems. Similar legislation was proposed by Congressman Nadler in the years since Epic Systems. Those bills reached the subcommittee but failed to become law. Although this bill is in its early stages, the current political landscape is starkly different than during the earlier attempted legislative efforts. However, the future of the current bill is nonetheless uncertain.
If you have any questions regarding the issues discussed above, or if you have any other Labor & Employment Law concerns, please contact the Underberg & Kessler attorney who regularly handles your legal matters or Ryan Biesenbach, the author of this piece, at (585) 258-2865.