Good News for Employers: Enforcement of Arbitration Agreements











Supreme Court Holds that Class Action Waivers in Arbitration Agreements DO NOT Violate the NLRA

Today, in a 5-4 ruling, the Supreme Court held that arbitration agreements that prohibit class or collective actions do not violate an employee’s rights under the National Labor Relations Act (“NLRA”). 584 U.S. (May 21, 2018)


Writing for the majority in the consolidated cases, Epic Sys. Corp. v. Lewis, Ernst & Young LLP et al., v. Morris et al., and National Labor Relations Board v. Murphy Oil USA, Inc., et al., Justice Neil Gorsuch noted that the “Court has never read a right to class actions into the [NLRA],” and concluded that agreements that require individualized arbitration proceedings do not violate the NLRA. Specifically, Justice Gorsuch explained that the general catch-all language in Section 7 of the NLRA that guarantees employees “the right to . . . engage in other concerted activities for the purpose of . . . other mutual aid or protection” could not displace the Arbitration Act or prohibit individualized arbitrations:

It’s more than a little doubtful that Congress would have tucked into the mousehole of Section 7’s catchall term an elephant that tramples the work done by these other laws; flattens the parties’ contracted-for dispute resolution procedures; and seats the [National Labor Relations Board] as supreme superintendent of claims arising under a statute it doesn’t even administer. 

In the dissent, Justice Ruth Bader Ginsberg, declared that “[e]mployees’ rights to band together to meet their employers’ superior strength would be worth precious little if employers could condition employment on workers signing away those rights.” In concluding that class actions waivers would interfere with and restrain an employee’s right under Section 7 of the NLRA, the dissent called for congressional action to correct “the Court’s elevation of the [Federal Arbitration Act] over workers’ rights to act in concert.”  

WHAT DOES THIS MEAN FOR EMPLOYERS?

This decision continues the trend of courts in favoring the enforcement of arbitration agreements. What the Supreme Court has now made clear, however, is that such enforcement extends to not only individual claims, but also class action claims.  


This Labor & Employment Law Alert was written by Mafalda Halligan. If you have any questions about the information contained in this alert or any other questions, please feel free to contact her at mafalda@riverrunhr.com


This Labor & Employment Alert provides information to our clients and friends about current legal developments in the area of HR compliance. The information contained in this Alert should not be construed as legal advice, and readers should not act upon it without appropriate counsel.


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