Beginning in approximately 2012, the National Labor Relations Board (“NLRB”) adopted the position that any class action waiver contained in an employment arbitration policy or agreement violates the right of employees to engage in “concerted activity” under § 7 and § 8 of the National Labor Relations Act (“NLRA”) and is therefore unenforceable. Employers may have NLRB Orders reviewed by the U.S. Court of Appeals. The first three U.S. Courts of Appeals to consider the NLRB’s position rejected it, holding that such class action waivers are enforceable. See NLRB v. D.R. Horton, 737 F.3d 344 (5th Cir. 2013); Sutherland v. Ernst & Young LLP, 726 F.3d 290 (2d Cir. 2013); NLRB v. Murphy Oil USA, Inc., 808 F.3d 1013 (5th Cir. 2015); and Cellular Sales of Missouri, LLC v. NLRB, 2016 WL 3093363 (8th Cir. 2016).
More recently, the Seventh Circuit and, on August 22, 2016, the Ninth Circuit reached the opposite conclusion, adopting the NLRB’s interpretation of the NLRA and therefore holding that class action waivers contained in employment policies or agreements are not enforceable. See Lewis v. Epic Sup. Corp., 823 F.3d 1147 (7th Cir. 2016) and Morris v. Ernst & Young, No. 13-16599 (Aug. 22, 2016). The Ninth Circuit remanded the Ernst & Young case to the district court to determine whether the unenforceable class action waiver could be severed and the remaining arbitration agreement enforced.
With the U.S. Courts of Appeals rendering diametrically conflicting opinions on this important and prevalent employment practice, we believe it is highly likely that the U.S. Supreme Court will address and resolve this split among the Circuit Courts. When that will occur (before or after the current vacant seat is filled) and what the outcome will be are more difficult to predict.
With this uncertainty hanging over employment arbitration policies, employers may wish to review their arbitration policies.
