California Labor &
Employment Law Blog
Jan. 17 2017

Supreme Court to Decide Whether Class Waivers Violate the NLRA

Topics: Arbitration Agreements, Class Actions

On Friday, the U.S. Supreme Court granted review in three cases presenting the issue of whether class action waiver provisions in employment arbitration agreements violate the National Labor Relations Act (“NLRA”).  This debate started a few years ago when the NLRB began issuing decisions holding that class action waivers violate the NLRA and that inclusion of such a provision in an employment arbitration agreement constitutes an unfair labor practice.  According to the NLRB, class action waivers interfere with employees’ rights under Section 7 of the NLRA to engage in concerted activity for their mutual aid and protection.  While the NLRB has since been steadfast in its position, most courts have rejected the NLRB’s view and have upheld class action waivers in arbitration agreements.  These courts include the Second, Fifth and Eighth Circuit Courts of Appeal, as well as the California Supreme Court.  However, in the last year, two federal Courts of Appeal issued decisions agreeing with the NLRB, thereby creating a split of authority on the issue among the Courts of Appeal and making the issue ripe for Supreme Court review.  The split has also created uncertainty and difficulty for multi-state employers with arbitration agreements because enforceability has varied depending on which state and federal circuit court is deciding the issue.  As expected, the Supreme Court granted review last week in three different cases all raising this same issue.  The three cases, which have been consolidated before the Supreme Court, are NLRB v. Murphy Oil USA, Inc., Epic Systems Corp. v. Lewis, and Ernst & Young LLP v. Morris.  In Murphy Oil, the Fifth Circuit Court of Appeals held that class action waivers do not violate the NLRA.  In Epic Systems and Ernst & Young, the Seventh and Ninth Circuits each held that class action waivers do violate the NLRA.  The Supreme Court will now resolve this split.  Oral argument is estimated for April, with a decision as early as June or July.  Stay tuned. In the meantime, the resolution of this issue will continue to depend and vary based on the forum for resolving the dispute.

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