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Contracts can provide for arbitration of workers’ disputes

On Behalf of | May 23, 2018 | Contracts

The validity and enforcement of arbitration clauses in contracts has been a volatile issue in business litigation courts in Oregon and the rest of the country. Such clauses come up in a number of contexts. Some are inserted in credit card contracts to compel consumers to arbitrate disputes rather than sue the company. They exist widely in contracts between businesses, calling for arbitration instead of litigation.

In general, the trend has been for the courts to uphold the validity and enforceability of such clauses. The U.S. Supreme Court ruled on May 21 that companies may compel their workers to engage in arbitration regarding wage and other employment disputes. The decision came from a hotly divided 5-4 vote of the Justices. The decision has a decidedly anti-union type of perspective in that it says that employers can prevent employees from acting together to bring their claims collectively or in class actions.

The decision concluded that the Federal Arbitration Act instructed federal courts to enforce arbitration agreements as they are worded. The workers in the case had cited to the National Labor Relations Act, which grants employees the right to engage in concerted activities for mutual aid and protection. The four dissenting Justices also argued that the decision conflicted with the right under federal labor laws of workers to unite collectively to assert their grievances.

The decision is estimated to have the potential of impacting some 25 million contracts. The decision can have far-reaching impact on the organizing activities of labor unions, but that prospect is not clear at this time. For example, the issue arises whether a company can compel its employees to subscribe to an agreement for arbitration that may directly or indirectly conflict with a collective bargaining procedure already established through a collective bargaining agreement with a union organization. It is likely that the collective bargaining agreement would prevail in most instances but individual disputes will have to be decided as they arise, both in Oregon and throughout the nation.  

Source:, “Supreme Court says businesses can force workers into arbitration to resolve disputes“, Robert Barnes, May 21, 2018