(Updated at 5 p.m. ET)
The Supreme Court ruled Monday that companies can prohibit workers from using class-action litigation to resolve workplace disputes, handing Epic Systems Corp. and other employers a win.
In a 5-4 decision on three consolidated cases, the justices said companies can include clauses in employment contracts that require employees to use individual arbitration to resolve disputes. That decision could affect about 25 million employees.
In one of the consolidated cases, Jacob Lewis wanted to sue Epic, his former employer, on behalf of a group of employees who said the technology vendor denied them overtime pay. Epic contended that its contracts prohibited employees from such group litigation and required them to individually undergo arbitration.
This kind of requirement tends to decrease the number of claims brought against companies, according to Alexander Colvin, a Cornell University professor writing for the Economic Policy Institute.
The Supreme Court ultimately agreed with Epic, saying that companies can require employees to resolve disputes individually outside of court, even if the situation affects many people.
"The virtues Congress originally saw in arbitration, its speed and simplicity and inexpensiveness, would be shorn, and arbitration would wind up looking like the litigation it was meant to displace" if workers gathered their complaints under class action lawsuits, Justice Neil Gorsuch wrote for the court.
But bringing individual claims could be cost-prohibitive for employees.
"This is a major victory for employers," said Richard Glovsky, co-chair of Locke Lord's labor and employment practice group. "The court's ruling clears the path, and a judicial logjam, to employers restricting the rights of employees to participate in class actions and who insist that they have their day in court."
Some employee advocates worried that the decision could stymie workers' challenges against sexual harassment in the workplace—a concern that's been in the foreground as a result of the #MeToo movement.
"Forced arbitration means women have to pursue their claims alone," said Christine Owens, executive director of the National Employment Law Project, in a statement.
Justice Ruth Bader Ginsburg called the majority opinion "egregiously wrong" and said the decision would lead to "huge under-enforcement of federal and state statutes designed to advance the well-being of vulnerable workers."
Epic founder and CEO Judy Faulkner was satisfied with the outcome. "When it comes to grievances regarding wages and hours, we believe individual arbitration agreements strike that reasonable balance and are pleased with the court's decision in support of this," she said in a statement.
Although one of the Supreme Court cases involved Epic, the decision doesn't single out healthcare companies and won't have a unique impact on the industry.
An edited version of this story can also be found in Modern Healthcare's May 28 print edition.
