By Dora Lane
Holland & Hart LLP
Does an agreement between an employer and an employee to resolve any employment disputes through individual arbitration (as opposed to through a class or collective action) violate the employee’s right to engage in protected concerted activity under the National Labor Relations Act (NLRA)? That is the issue before the U.S. Supreme Court as it heard its first oral argument of this term on the first Monday of October.
Why Does It Matter?
Employers increasingly use arbitration agreements with their employees in order to avoid the expense and uncertainty associated with court litigation. By requiring that employees resolve employment disputes in front of a neutral arbitrator, employers hope to keep such matters out of the public eye while also (hopefully) speeding up what would otherwise be a lengthy court process.
But it is not merely arbitration that employers often seek. It also is individual arbitration, meaning that the agreement includes language that prevents the employee from pursuing any employment matters on a class or collective basis with other employees who have similar claims against the employer. By pre-emptively blocking class actions in employment disputes, companies may avoid large lawsuits involving hundreds, if not thousands, of employees that may put multimillion-dollar damages and attorneys’ fees at stake.
Class Action Waivers Versus Employee Rights
In 2012, the National Labor Relations Board, the federal agency charged with enforcing the NLRA, ruled that arbitration agreements banning employees from pursuing class actions are unenforceable. In its controversial D.R. Horton decision, a majority of the then-members of the board determined that class action waivers violate the NLRA by interfering with employees’ Section 7 rights to engage in concerted activities for their mutual aid and protection. The board concluded that an employee who files a class or collective action, whether in court or arbitration, seeking to improve wages or working conditions on behalf of a group of employees is engaged in conduct protected by Section 7 of the NLRA.
In late 2013, the Fifth Circuit Court of Appeals overturned the board’s D.R. Horton decision. It relied on the Federal Arbitration Act (FAA), which provides that arbitration agreements are valid, irrevocable and enforceable. Courts routinely uphold the validity of arbitration agreements, and the Fifth Circuit stated that the NLRA would not override the FAA unless it contained a congressional command providing for a class action right. In ruling that arbitration agreements containing class waivers are enforceable, the Fifth Circuit joined some of the other federal appellate courts that had ruled similarly in recent years. But the Ninth and Seventh Circuit Courts of Appeal had ruled in favor of the NLRB on this issue, creating a split in the federal appellate circuits. (Nevada is located in the Ninth Circuit.)
Read the rest of the story at nnbw.com.
Dora Lane is an attorney with Holland & Hart LLP.