The rights of tens of millions of employees have possibly been limited after the US Supreme Court ruled that employers can force workers to use individual mediation instead of class-action lawsuits to press legal claims.

By a 5-4 vote, the Supreme Court ruled - for the first time - that employees cannot join together to challenge violations of federal labor laws if they sign employee agreements to arbitrate claims.

This is a ruling based on the 1925 Federal Arbitration Act (FAA) - which could affect the rights of tens of millions of private-sector workers who do not belong to a union - and the ruling develops previous Supreme Court decisions that let companies channel disputes with consumers and other businesses into arbitration.

The decision applies directly to wage-and-hour claims.  But in addition, it is thought that it may let employers avoid class-action job discrimination - although the court did not directly address that issue. Civil rights advocates have suggested that the ruling will threaten class-action discrimination lawsuits. 

Fatima Goss Graves - President of the National Women’s Law Center said:

“The Supreme Court has taken away a powerful tool for women to fight discrimination at work. Instead of banding together with co-workers to push back against sexual harassment, pay discrimination, pregnancy discrimination, racial discrimination, wage theft and more, employees may now be forced behind closed doors into an individual, costly -- and often secret -- arbitration process."

On behalf of the majority of judges, Justice Neil Gorsuch wrote:

".......The policy may be debatable but the law is clear: Congress has instructed that arbitration agreements like those before us must 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 clear intention to displace the Arbitration Act. Because we can easily read Congress’s statutes to work in harmony that is where our duty lies.”

Employment groups and attorneys everywhere celebrated the ruling and employers are now likely to get their employees to sign the type of employment agreement that the High Court has ruled effective.  This will have great power in protecting businesses from costly wage-and-hour lawsuits.

An attorney who represents management in labor-management disputes - Ron Chapman – stated:

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