The Supreme Court Will Resolve Class Action Waiver Split

Arbitration agreements that require employees to pursue claims in arbitration rather than in court have long been enforced pursuant to the Federal Arbitration Act (“FAA”).   Due to a series of Supreme Court decisions, employers increasingly have included class and collective action waivers in such agreements.   In 2012, the National Labor Relations Board (NLRB) ruled that class action waivers in arbitration agreements violate employees’ rights under the National Labor Relations Act (NLRA). The U.S. Court of Appeals for the Second, Fifth, and Eighth Circuits disagreed, finding that these waivers do not violate the NLRA and are enforceable under the FAA.  Disagreeing with the NLRB, in D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013) and Murphy Oil USA, Inc. v. NLRB, 808 F.3d 1013 (5th Cir. 2015), the United the Fifth Circuit generally held that class and collective action waivers do not violate the NLRA.  Since then, the Second and Eighth Circuits followed the Fifth Circuit and enforced arbitration agreements requiring employees to submit their employment claims to individual arbitration. Last May, the Seventh Circuit created a circuit split in Lewis v. Epic Systems Corp., 823 F.3d 1147 (7th Cir. 2016), holding that arbitration agreements that prohibit employees from bringing or participating in class or collective actions violate the NLRA.  Most recently, 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. In September 2016, the employers in Epic Systems Corp. and Ernst & Young and the NLRB in Murphy Oil each petitioned the Supreme Court to decide the issue once and for all. Thus, the Supreme Court will consider three cases in order to resolve this split, but any resolution could depend on the timing of the hearing. If the case is heard this term, before President Trump’s nominee for the vacancy on the Supreme Court is confirmed, it could end in a 4-4 tie. Some observers think this case will roll over to the next term giving the Trump administration time to consider whether it is going to change its position on any of the issues.  If you have any questions regarding employment agreements, contact your Tampa Employment Lawyer, Darren McClain.

This post was written by Darren McClain