Supreme Court Upholds Class Action Waivers in Employment Contracts

Supreme Court Upholds Class Action Waivers in Employment Contracts

In a 5–4 ruling handed down on Monday, the US Supreme Court ruled that organizations can legally require their employees to sign arbitration agreements in their work contracts and waive their right to resolve labor disputes through class-action lawsuits. The court split on ideological lines, with the five conservative justices voting to allow class action wavers and the liberal minority dissenting, the New York Times reported:

Writing for the majority, Justice Neil M. Gorsuch said the court’s conclusion was dictated by a federal law favoring arbitration and the court’s precedents. If workers were allowed to band together to press their claims, he wrote, “the virtues Congress originally saw in arbitration, its speed and simplicity and inexpensiveness, would be shorn away and arbitration would wind up looking like the litigation it was meant to displace.”

Justice Ruth Bader Ginsburg read her dissent from the bench, a sign of profound disagreement. In her written dissent, she called the majority opinion “egregiously wrong.” In her oral statement, she said the upshot of the decision “will be huge under-enforcement of federal and state statutes designed to advance the well being of vulnerable workers.” Justice Ginsburg called on Congress to address the matter.

The ruling, which the Times adds could affect some 25 million employment contracts, comes nearly a year and a half after the high court agreed to hear a group of cases on the legality of arbitration clauses and class action waivers. It was not unexpected, given the court’s conservative majority and the inclinations Gorsuch and his right-leaning colleagues have shown in other labor-related cases.

Business groups and employer-side attorneys cheered the ruling, which they say will free companies from burdensome litigation and allow disputes to be resolved through the cheaper and speedier process of arbitration. Labor rights advocates expressed dismay, however, warning that it would result in a rollback of employees’ fundamental rights and would prove particularly disastrous in discrimination and harassment cases. In a Times op-ed, Terri Gerstein and Sharon Block, of Harvard Law School’s Labor and Worklife Program, criticize the ruling for taking away a key safety net for employees:

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NLRB, Justice Department Take Opposite Sides as Supreme Court Weighs Class-Action Waivers

NLRB, Justice Department Take Opposite Sides as Supreme Court Weighs Class-Action Waivers

The US National Labor Relations Board considers arbitration agreements that bar employees from bringing class-action lawsuits against their employers invalid, according to a brief the NLRB filed in three cases the Supreme Court is hearing together on the legality of these class-action waivers, Allen Smith reports at SHRM:

Class-action waivers violate the National Labor Relations Act’s (NLRA’s) right to protected concerted activity, the NLRB argued in the brief written by General Counsel Richard Griffin Jr., an appointee of President Barack Obama whose term expires Nov. 4. The NLRB’s brief contradicts the Department of Justice’s (DOJ’s) June 16 brief in favor of class-action waivers—which was a shift from the DOJ’s position under the Obama administration. …

The NLRA’s right to protected concerted activity “is the core substantive right protected by the NLRA and is the foundation on which the act and federal labor policy rest,” the board stated. “An arbitration agreement requiring employees to resolve legal disputes solely on an individual basis is thus comparable to an unlawful contract providing that employees can be fired on the basis of age, contrary to the Age Discrimination in Employment Act, or paid less than the minimum wage, contrary to the Fair Labor Standards Act (FLSA).” Such unlawful contracts would not be permitted, so the Supreme Court similarly should not let the core purpose of the NLRA be undermined, the NLRB argued.

In a development welcomed by many employers, the Justice Department in June reversed its position on this issue, switching sides to argue on behalf of employers and against the NLRB. At the time, Greensfelder attorney Katherine Fechte described the change of position as “unprecedented” in a labor-related case:

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