Corporate > AG Deal Diary > Supreme Court Decision Impacting Class and Collective Action Waivers in Employment Arbitration Clauses
24 May '18

On May 21, 2018, a closely divided United States Supreme Court held in Epic Systems Corp. v. Lewis that employers may require employees to resolve employment disputes with an employer through individual arbitration even if the arbitration agreements waive the right to proceed by class or collective action.

The case resolved a circuit split stemming from the Supreme Court’s decisions in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2010), and DIRECTV, Inc. v. Imburgia, 136 S. Ct. 463 (2015), which upheld the validity of arbitration agreements that included class action waivers. In response to those decisions, plaintiffs in employment actions sought relief from the National Labor Relations Board (NLRB). They argued that such waivers violated Section 7 of the National Labor Relations Act (NLRA), which grants employees the right “to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” 29 U.S.C. § 157.

In administrative proceedings, the NLRB repeatedly found in favor of the plaintiffs, striking down the class action waivers as a violation of the right to engage in “concerted activities.” It rejected the argument from employers that the class action waivers are enforceable under the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq. The FAA, with its strong policy favoring arbitration, overrides any countervailing provisions, such as Section 7 of the NLRA.

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