Employers everywhere will likely rush to get their employees to sign the type ofemployment agreement the High Court just ruled has great power to protect businessesfrom costly wage-and-hour lawsuits.

By a 5-4 vote, the Supreme Court just ruled for the first time that employees cannot bandtogether to challenge violations of federal labor laws like the FLSA if they sign employeeagreements to arbitrate claims.

It’s a ruling that could impact the rights of tens of millions of non-union, private-sectorworkers.

In its ruling the High Court specifically cited the 1925 Federal Arbitration Act (FAA), statingthat the FAA is not negated by the more recent National Labor Relations Act (NLRA), andthat employees who sign employment agreements to arbitrate claims are required to do soon an individual basis; they are prohibited from banding together to enforce claims ofwage-and-hour violations.

The ruling here came from three different cases against Ernst & Young LLP, Epic SystemsCorp. and Murphy Oil USA Inc.

In each of the cases, the companies required individual employees, as a condition of theiremployment, to waive their rights to be part of a class-action suit.

Also in all of the cases, the employees tried to sue as a group, claiming the amounts theycould obtain in individual arbitration were negated by the huge legal fees they’d have topay to bring a claim forward in the first place. The workers also claimed their right tocollective action (aka, becoming part of a class status) is guaranteed by the NLRA.

But ultimately the High Court didn’t agree.

Neil Gorsuch, writing for the majority of the Court, said:

“… the law is clear: Congress has instructed that arbitration agreements like those before usmust be enforced as written. 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 clearintention to displace the Arbitration Act. Because we can easily read Congress’s statutes towork in harmony, that is where our duty lies.”

While the Court’s minority offered a passionate and lengthy dissent, going as far as to callthe ruling “egregiously wrong,” employment groups and attorneys everywhere celebratedthe ruling.

And for good reason.

Ron Chapman, an attorney who represents management in labor-management disputes,gave this very succinct statement on why this ruling was cause for celebration:

“It gives employers the green light to eliminate their single largest employment law risk with thestroke of a pen.”

And Chapman expects many employers to use that “stroke of a pen” to impose bindingarbitration contracts on workers ASAP

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