Supreme Court Holds Class Action Waivers in Employment Agreements Are Enforceable

On May 21, 2018, the Supreme Court held class action waivers in employment arbitration agreements do not violate the National Board Relations Act (“NLRA”).

Employers and employees nationwide had been eagerly awaiting this decision.  Monday’s decision is a major victory for employers, given that class action lawsuits and collective actions are often costly and create public relations issues for employers. 

The Court’s decision concludes a federal Circuit Court split that started years ago.  The Ninth Circuit created an internal split. This inner-circuit split deepened a nationwide debate. The Second, Fifth, and Eighth Circuits have ruled that class action waivers do not interfere with employees’ NLRA rights, whereas the Seventh and Ninth Circuits have ruled that such class action waivers violate the NLRA. This dissonance prompted the U.S. Supreme Court to hear three consolidated cases on the subject: Epic Systems Corp. v. Lewis, Ernst & Young LLP v. Morris, and National Labor Relations Board v. Murphy Oil USA, Inc.. The high court heard oral arguments in these three cases on October 2, 2017, and issued its decision on May 21, 2018.  

In upholding the class action waivers in arbitration agreements, the Supreme Court continued its practice of upholding arbitration agreements, again stating that they must be enforced according to their terms unless Congress has directly instructed otherwise. This decision allows employers to continue employees to waive class action and collective action rights as part of their arbitration agreements. 

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