The United States Supreme Court began its 2018 term on Monday, October 1. So far, it has agreed to review three employment cases: Lamps Plus v. Varela; New Prime v. Oliveira; and Mt. Lemmon Fire Dist. v. Guido. These cases address important employment issues relating to age discrimination and arbitration of employment disputes.
Lamps Plus v. Varela
The Supreme Court has in recent years broadly interpreted arbitration agreements between employers and employees. This trend is exemplified in the decision by the Supreme Court this past May in Epic Systems Corp. v. Lewis. In that case, the Court decided that an employer could contractually impose upon its employees two restrictions: (a) they could be required to arbitrate any workplace dispute rather than taking it to court; and (b) they could be prohibited from seeking relief in arbitration on a “class-wide” basis, that is, seeking to act as a representative of a group of other potential claimants who might be in a similar situation. The Court further held that these limits could be placed upon employees, whether they were pursuing claims for discrimination or claims for unpaid wages.
INSIGHTS: EPIC SYSTEMS
Supreme Court Okays Class Action Waivers in Employee Arbitration Agreements
Epic Systems Corp. v. Lewis put to rest one of the most publicized and debated legal issues affecting employees and employers this decade.
The Epic Systems decision has already had a significant impact in employment disputes. Within the past week, a federal court of appeals issued a ruling in a massive lawsuit that had been filed by hundreds of Uber drivers. These drivers claimed that Uber had misclassified them as independent contractors rather than as employees, and that as a result, they were denied overtime pay they should have received. The Court of Appeals reversed rulings that had allowed the case to proceed on a “class-wide” basis, and instead ruled that arbitration agreements that the individual drivers had signed were valid, requiring all of the pending claims to be submitted to arbitration.
The Varela case raises an issue of the arbitrability of claims that are pursued on a “class-wide” basis that is related to the issue addressed in Epic Systems v. Lewis. In that case, an employee sued his employer claiming that the employer had violated his rights by releasing personal information because of a computer scam. The Court of Appeals reviewed the agreement in question, which contained an arbitration clause. After considering the wording, the Court of Appeals decided that the agreement did not expressly prohibit “class-wide” arbitration of claims, and therefore upheld the right of the employee to pursue the case in arbitration on a class-wide basis.
This case therefore presents a question that is somewhat different from the question the Supreme Court resolved in Epic Systems v. Lewis: whether an arbitrator has the authority to arbitrate class-wide claims if there is no explicit limitation on the right of the employee to pursue class-wide relief.
The Court will evaluate an interpretation of a contract under California law to determine whether that interpretation conflicts with the requirements of the Federal Arbitration Act. If the Court decides there is such a conflict, then the state law interpretation will be invalidated.
New Prime v. Oliveira
In New Prime v. Oliveira, the Supreme Court has now agreed to review whether individual truck drivers labeled as independent contractors by their company could be required to arbitrate disputes over “misclassification.” These individuals had all signed agreements with the companies indicating that any dispute would be submitted to arbitration. The truck drivers are challenging the use of this method of alternative dispute resolution in its entirety, focusing upon unique language contained in the Federal Arbitration Act that they claim exempts truck drivers (that is, those involved as transportation employees) entirely from the coverage of that Act.
This case is being watched to determine the extent to which the Supreme Court will – or will not – expand or contract the arbitrability of employment disputes.
Mt. Lemmon Fire Dist. v. Guido
Finally, the Court will address an important question concerning the scope and applicability of the Age Discrimination in Employment Act. That law generally requires that to be covered by the Act, a private employer must have employed at least 20 employees at any time during the year an age discrimination claim is filed, or during the year prior to that.
In this case, the employer was a fire department which qualified as a “public” employer because it is a “political subdivision” of the State of California. The fire department claimed that because it had fewer than 20 employees at all times, it was not covered by this Act and therefore could not be sued for age discrimination. The employees responded – successfully – that the “20 employee” limit did not apply to public employers because of the wording of the Act and, therefore, any public employer of any size could be sued for age discrimination.
The Court of Appeals considering this issue ruled in favor of the employees. It did so despite the fact that every other federal Court of Appeals to consider this issue has ruled the opposite way. The Supreme Court will therefore be deciding the proper scope of the coverage of the Act and its potential impact upon public employers.
Lionel M. Schooler is a partner at Jackson Walker and has practiced employment law for more than 40 years. He is also qualified as an arbitrator serving on the panels of the American Arbitration Association, the Chartered Institute of Arbitrators, and on the Advisory Board of the Institute for Transnational Arbitration. He frequently speaks and writes about employment law and arbitration.