Last week, the U.S. Supreme Court accepted review of a case that should decide whether employers can include class and collective action waivers in mandatory arbitration agreements signed with individual employees. Under mandatory arbitration, the employer and employee agree to forego litigating disputes that may arise over the employment relationship in favor of binding arbitration. Employers have increasingly included class and collective action waiver language in arbitration agreements, in order to require that any arbitration be based solely on that employee’s personal claims, and not those aggregated into multiple employee actions.
Over the past several years, the National Labor Relations Board (NLRB) has taken the position in administrative litigation that class and collective action waivers violate NLRA provisions that protect employees’ rights to collectively pursue changes to terms and conditions of employment. The majority of federal appellate courts reviewing these NLRB decisions have refused to adopt the Board’s reasoning, finding that the waivers are enforceable. A minority of federal courts agree with the NLRB, creating the circuit split that prompted the Court’s review.
The three consolidated cases up for review by the Supreme Court could end this standoff, assuming that any position can attract a majority of the eight-member Court. In the past, the Court has favored arbitration, repeatedly upholding challenges to enforceability of arbitration agreements based on the terms of the Federal Arbitration Act. A decision in this case by the summer could resolve this legal battle between the applicability of the FAA and NLRA to employment class action waivers.