Employee Waiver of Class Action Rights to be Decided

Can you require that an employee waive the right to participate in a labor related class action by putting that waiver in the employee's employment agreement? The Supreme Court will decide this year. It has agreed to decide whether class action waivers in employment arbitration agreements violate the National Labor Relations Act (“NLRA”). Granting certiorari in National Labor Relations Board v. Murphy Oil USA (No. 16-307), Epic Systems Corp. v. Lewis (No. 16-285), and Ernst & Young LLP v. Morris (No. 16-300), the Supreme Court has taken up this issue.

The National Labor Relations Board (“NLRB”) has taken the position that employers violate the NLRA when they make class action waivers in arbitration agreements a condition of employment. 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 U.S. Court of Appeals for the Fifth Circuit generally held class and collective action waivers do not violate the NLRA. The Second and Eighth Circuits have followed the Fifth Circuit. In May, 2016, the Seventh Circuit, in Lewis v. Epic Systems Corp., 823 F.3d 1147 (7th Cir. 2016), held arbitration agreements that prohibit employees from bringing or participating in class or collective actions violate the NLRA. The Ninth Circuit followed suit in Morris v. Ernst & Young, No. 13-16599, 2016 U.S. App. LEXIS 15638 (9th Cir. Aug. 22, 2016).

Next up: the Supreme Court.