Supreme Court Delays Major Employment Arbitration Class Action
Author: David B. Weisenfeld, XpertHR Legal Editor
February 10, 2017
The US Supreme Court has announced it will wait to hear a trio of mandatory arbitration cases in employment until its next term, which does not begin until October. The cases involve three Fair Labor Standards Act disputes involving whether employers can use mandatory arbitration clauses to ban employees from bringing class action lawsuits.
The Court had agreed in January to take up the cases, which typically means arguments will be heard in early spring. However, pushing back the arguments at least until the fall would seem to ensure that a ninth justice will be in place once the cases are heard. President Trump's nominee, 10th Circuit Court of Appeals Judge Neal Gorsuch, is currently awaiting his confirmation hearing.
The use of mandatory arbitration clauses is an issue that has divided the Supreme Court in the past. Four of the justices have consistently voted to uphold these clauses as consistent with the Federal Arbitration Act while four have been steadily opposed. Most recently, the justices upheld a mandatory arbitration agreement in the consumer context in a 5-4 ruling in AT&T Mobility v. Concepcion, with the fifth vote provided by the late Justice Antonin Scalia.
Judge Gorsuch's record as a federal appellate judge has generally favored employers. If confirmed, he would be in a position to cast a likely pivotal vote in these closely-watched cases. The US Chamber of Commerce and other pro-business organizations have filed briefs asking the Supreme Court to find the class action waivers enforceable.
The National Labor Relations Board takes the position that these waivers conflict with federal labor law by preventing workers from coming together to engage in concerted activities about workplace conditions.
Two federal appellate courts, the 7th Circuit and the 9th Circuit, agreed in ruling that the mandatory arbitration class action waivers could not be enforced in Epic Systems Corp. v. Lewis and Ernst & Young v. Morris. However, the 5th Circuit upheld a similar arbitration agreement in NLRB v. Murphy Oil USA.