Supreme Court to Consider Lawfulness of Employee Class and Collective Action Waivers

Last week, the United States Supreme Court agreed to hear arguments as to whether employees may legally waive their rights to pursue class action and/or collective action claims against their employers. Many employers require employees to agree in writing to arbitrate, rather than litigate, potential claims the employees may have. Such employees, employers argue, waive their rights to file a class action and/or collective action lawsuit, meaning that the employees must pursue their claims on an individual basis in arbitration.

Opponents of this practice, including the National Labor Relations Board (“NLRB”), have for years alleged that these waivers violate fundamental employee rights. For example, the NLRB claims that these waivers violate the National Labor Relations Act (“NLRA”) because they deter employees from engaging in “protected concerted activity,” which is when employees take action for their “mutual aid or protection.”

The NLRB’s view is arguably inconsistent with federal court precedent concerning the Federal Arbitration Act (“FAA”). In fact, many federal courts have refused to follow the NLRB’s view and have refused to follow NLRB rulings in this regard. However, two federal courts of appeal – the Seventh and Ninth Circuits – have embraced the NLRB’s view. The Supreme Court has decided to resolve this split in opinion.

In the meantime, courts may continue to enforce employee arbitration agreements that contain class action and/or collective action waivers, and the NLRB will continue to find such agreements unlawful. Larger employers with multi-jurisdiction presence may be subject to conflicting rules until the Supreme Court reaches a decision.

Also complicating matters is the fact that the Trump administration may change the composition of the NLRB itself, which could lead the NLRB to backtrack or abandon its current position. Additionally, the Supreme Court only has eight members currently, meaning that a 4-4 tie amongst the Justices is possible.

Please contact your Hahn Loeser & Parks Labor and Employment attorneys for more information on these continuing developments.