Supreme Court to Decide Mandatory Employee Arbitration Cases
Author: David B. Weisenfeld, XpertHR Legal Editor
January 20, 2017
The US Supreme Court has agreed to decide whether employers can use mandatory arbitration clauses to ban employees from bringing class action lawsuits over workplace disputes. The Court announced it will hear a trio of Fair Labor Standards Act cases involving the enforceability of class action waivers, which have become increasingly common in the employment context.
The National Labor Relations Board (NLRB) 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 Chicago-based 7th Circuit Court of Appeals and the San Francisco-based 9th Circuit Court of Appeals, agreed that these mandatory arbitration agreements cannot be enforced in Epic Systems Corp. v. Lewis and Ernst & Young v. Morris respectively.
But the New Orleans-based 5th Circuit Court of Appeals upheld a similar arbitration agreement in NLRB v. Murphy Oil USA, reasoning that an employer does not engage in an unfair labor practice by enforcing an arbitration agreement that prohibits class actions.
The Supreme Court will hear all three cases together with arguments likely to occur in April, and a ruling expected by the end of the Court's term in late June. The US Chamber of Commerce and other pro-employer organizations have filed briefs asking the nation's highest court to find the class action waivers enforceable.
The justices narrowly upheld a mandatory arbitration agreement in the consumer realm in a 5-4 ruling in AT&T Mobility v. Concepcion that unhappy cellular phone customers were prohibited from bringing a class action lawsuit. The Supreme Court has generally favored arbitration clauses in previous employment disputes. But the fifth vote in those cases as well as Concepcion was provided by the late Justice Antonin Scalia.
Thus, the outcome in the three pending employment arbitration cases may well depend on whether the open seat on the Court is filled by the time it hears oral arguments in the spring.