Supreme Court Upholds Use of Class Action Waivers by Employers

On May 21, 2018, the U.S. Supreme Court approved the use of class action waivers by employers. Such a waiver requires an employee to submit employment disputes to an individual arbitration proceeding and forbids the employee from banding together with other employees to file class action lawsuits or other court claims against the employer. This was a long-awaited ruling by the U.S. Supreme Court, which was split 5-4 in deciding the case. The Supreme Court rejected the National Labor Relations Board’s argument, supported by several U.S. Courts of Appeals, that class action waivers violate the literal language of Section 7 of the National Labor Relations Act, which gives employees the right to engage in concerted activity for their own mutual aid and protection. This decision will most likely have its greatest impact on the ever-burgeoning number of wage and hour class actions claims. Employers who do not have arbitration agreements, or an agreement with such a class action waiver, would do well to consider “fixing” that issue, now that the Supreme Court has validated their use again. No change in the law is likely unless Congress decides to amend the Federal Arbitration Act. Of course, individual states can forbid the use of such waivers as a matter of state law with respect to certain kinds of state law claims.
 
If you wish to discuss some of the deeper ramifications of the Court’s decision, or for assistance in developing an employee arbitration agreement, don’t hesitate to contact us.

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