Supreme Court Blesses Employers’ Use of Class Action Waivers

As previously reported on October 13, 2017, see here, the Federal Courts of Appeal were evenly divided on the question of whether class action waivers contained in otherwise enforceable employment arbitration agreements were permissible.  Three Courts of Appeal, i.e., the Sixth, Seventh, and Ninth Circuits, had accepted the position advocated by the National Labor Relations Board (“NLRB”) and plaintiffs’ attorneys that such waivers violated workers’ Section 7 rights to engage in protected concerted activity under the National Labor Relations Act.  Three other Courts of Appeal, i.e., the Second, Fifth, and Eighth Circuits, had expressly rejected that argument.

Today, the U.S. Supreme Court rejected the position of the NLRB in a 5-4 ruling on three consolidated cases, i.e., Epic Systems Corp. v. Lewis, NLRB v. Murphy Oil USA, Inc., and Ernst & Young LLP v. Morris.  The Supreme Court majority reasoned that Section 7 of the National Labor Relations Act was intended by Congress to protect workers’ rights to organize labor unions and bargain collectively, but was not intended to regulate class action litigation in the courts or in arbitration.

In recent years, plaintiffs’ attorneys have effectively utilized class action procedures to bring massive wage and hour and other employment related lawsuits in both state and federal court.  Today’s ruling by the Supreme Court may slow down the onslaught of such class actions.  It is anticipated that the Supreme Court’s consistent enforcement of arbitration agreements in the employment context, now including the enforcement of class action waivers contained in such agreements, will encourage even more employers to put such arbitration agreements in place.

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