United States: U.S. Supreme Court Approves Use Of Class Action Waivers In Employment Arbitration Agreements

The enforceability of class action waivers in employment arbitration agreements is one of the most hotly contested wage and hour issues of this decade. For years, the enforceability of class action waivers has been litigated in numerous states and jurisdictions, with the latest national dispute centering over whether class action waivers are unenforceable under the National Labor Relations Act (NLRA). (For a detailed discussion, see our article published in Law360 here).

In January 2012, the National Labor Relations Board (NLRB) in In re D.R. Horton Inc. held that class action waivers violate and are unenforceable under the NLRA. This decision triggered more than six years of contentious, multijurisdictional litigation concerning the enforceability of class action waivers. The end result was a split among federal appellate courts; specifically, the Second, Fifth, and Eighth Circuit Courts of Appeals found class action waivers to be enforceable while the Sixth, Seventh, and Ninth Circuit Courts of Appeals held that they violate the NLRA.

Today, on May 21, 2018, the U.S. Supreme Court held in a trio of cases—Epic Systems Corp. v. Lewis; Ernest & Young LLP v. Morris; and NLRB v. Murphy Oil U.S.A., Inc.—that class action waivers are enforceable notwithstanding the NLRA. This is an important victory for employers across the country and will have huge implications on wage and hour litigation for years to come.

In light of the Court's decision, employers should evaluate whether they wish to utilize arbitration agreements with class action waivers and/or whether their current arbitration agreements are compliant with law. For instance, in California, class action waivers are inapplicable to representative actions under the California Private Attorneys General Act. Lewis Brisbois' employment law attorneys are available to counsel employers on their arbitration agreements.

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