U.S. Supreme Court to look at important employee rights issue this term: Should employment class action waivers be enforceable?


These days it seems like the United States Supreme Court has been getting a lot of attention, in the wake of brutal election season and with recent discussions about a potential Supreme Court nominee to fill the seat left vacant by the passing of the late Antonin Scalia.  Palay Hefelfinger APC also follows the Supreme Court developments closely, as the nation’s highest court can indeed impact workers’ rights and employment lawyers’ ability to fight for these important rights.

Recently, the U.S. Supreme Court agreed to hear and decide whether class action waivers in employment arbitration agreements violate the National Labor Relations Act (“NLRA”).  Many employers require as a condition of employment that their employees sign arbitration agreements, and often times these agreements contain language waiving the employee’s rights to have a jury trial or bring class actions to remedy some employer wrongdoing.  The Supreme Court’s action promises the much-anticipated resolution where different courts across the land have split on the issue.

The U.S. Supreme Court granted certiorari (agreed to take up the cases) in three lawsuits involving the same principal issue -- National Labor Relations Board v. Murphy Oil USA (No. 16-307); Epic Systems Corp. v. Lewis (No. 16-285); and Ernst & Young LLP v. Morris (No. 16-300), consolidating them for oral argument.

What Are Arbitration Agreements And Why Do Employers Want Them?

Arbitration agreements generally require employees to pursue claims in arbitration, before a private judge, rather than in court.  They have long been enforced pursuant to the Federal Arbitration Act (“FAA”). Due to a series of Supreme Court decisions, employers increasingly have included more and more employer-friendly provisions, including class and collective action waivers, in such agreements. However, the National Labor Relations Board (“NLRB”) has taken the position that employers violate the NLRA when they make such waivers in arbitration agreements a condition of employment.

Federal Courts across the country, in different circuits, have both aligned and departed from the NLRB’s point of view, creating a “split of authority.”  Recently in California, in Morris v. Ernst & Young, No. 13-16599, 2016 U.S. App. LEXIS 15638 (9th Cir. Aug. 22, 2016), the Ninth Circuit agreed with the Seventh Circuit and the NLRB, and ruled in a case that class action waivers do, in fact, violate the NLRA.

Class actions remain an important and vital tool in the fight for workers’ rights.  Oftentimes, a class action lawsuit is the only viable method to effectively correct an illegal corporate policy affecting hundreds (or thousands) of workers – i.e., strength in numbers.  Since Palay Hefelfinger APC only represents employees, we believe strongly that requiring workers to give up important, established legal remedies in order to hold a job is unfair and shifts the balance of power to corporate America.

Large companies prefer to take this “tool” – the class action device - out of the employees’ toolbox.  This is accomplished with arbitration agreements that contain class action waiviers, which allows companies to take on employee disputes one-on-one, in private proceedings, with a private judge.  It discourages collective action and also eliminates the risk of having a jury hear unfavorable facts about unlawful company practices. 

As such, we will watch eagerly to see what the Supreme Court decides in the matter!  Whatever the outcome, we will continue to represent employees in their fight for fair pay, safe and equal working conditions, one way or another.  Meanwhile, please contact a Palay Hefelfinger APC attorney with any questions about arbitration agreements, class actions, or any other employment law issues.