Monday, January 16, 2017

SCOTUS to review NLRB ban on class-action waivers

One of the biggest issues on the NLRB’s hit list over the past few years has been class-action waivers. In D.R. Horton, a 3-2 majority of the Board held that an arbitration agreement which requires employees to waive their right to collectively pursue employment-related claims in all forums (i.e., by giving up their right to file or join class or collective actions) violates employees’ rights under the National Labor Relations Act to engage in protected concerted activity. This issue is significant, as employers seek to use class-action waivers to combat the plague of wage-and-hour lawsuits.

In the four years since D.R. Horton, the NLRB has invalided hundreds of class-action waivers. On appeal, however, not all federal circuit courts have been kind to D.R. Horton. The 5th Circuit overturned D.R. Horton itself, while other circuits have sided with the NLRB on this important issue.

Now, the Supreme Court is poised to have the final say.

Late last week SCOTUS agreed to hear the appeal of three cases, which should put this issue to bed once and for all. In NLRB v. Murphy Oil USA (5th Cir., holding that the “corporation did not commit unfair labor practices by requiring employees to sign its arbitration agreement or seeking to enforce that agreement in federal district court.”), Lewis v. Epic Systems (7th Cir., holding that an arbitration agreement that “precludes employees from seeking any class, collective, or representative remedies to wage-and-hour disputes” violates the NLRA), and Morris v. Ernst & Young LLP (9th Cir., agreeing with Lewis, holding that “an employer violates the National Labor Relations Act by requiring employees to sign an agreement precluding them from bringing, in any forum, a concerted legal claim regarding wages, hours, and terms and conditions of employment.”), the justices agreed to decide whether agreements to require employees to forgo class actions or collective proceedings, and instead resolve employment disputes via individual arbitration, violate the NLRA.

Stay tuned to this space for updates we move through oral argument and the opinion, as this case is poised to be one of the most significant of 2017.