Will the Supreme Court Agree with the NLRB that Pre-Dispute Employment Arbitration Provisions Containing Class and Collective Action Waivers in Both Judicial and Arbitral Forums Violate the National Labor Relations Act – Whether There is an Opt-Out or Not?

Abstract

Should employers be able to require individual employees to sign away their rights to collective action as a condition of employment? The National Labor Relations Board has held in D.R. Horton and Murphy Oil USA that when employers require employees to waive their right to “joint, class, or collective claims addressing wages, hours, or other working conditions against the employer in any forum, arbitral or judicial” as a condition of employment, this violates the NLRA. Even allowing prospective employees to opt out of such class waivers does not cure the violation in the NLRB’s view according to its decision in On Assignment Staffing Services. A circuit split has developed on enforcement of the Board’s orders on the class waiver issue with the Fifth and Eighth Circuits in particular denying the NLRB enforcement, while the Seventh and Ninth Circuits support the Board's position. There are many class waiver cases currently pending on appeal with over thirty awaiting resolution before the Fifth Circuit alone. The Supreme Court recently granted certiorari on three pending cases: NLRB v. Murphy Oil (Fifth Circuit), Epic Systems v. Lewis (Seventh Circuit) and Ernst & Young v. Morris (Ninth Circuit). This article discusses the NLRB’s and courts’ positions from five recent cases involving class waivers in individual employment dispute agreements. It suggests how the courts and the Supreme Court should rule as well as the possibility of legislative action.

Keywords: predispute employment arbitration provisions, class or collective action waiver, opt-out, national labor relations board, national labor relations act, circuit split, United States Supreme Court, concerted activity, mutual aid or protection, judicial or arbitral forum, access to NLRB

JEL Classification: K31, K12, K 23, J70, J78, J83, J88