Employer's Legal Resource Blog

Class and Collective Action Waivers in Arbitration Agreements: A Useful Tool for Employers or An Unfair Labor Practice?

8.11.2017

An increasingly popular tool for employers is the arbitration agreement. Employers can have their employees sign an arbitration agreement, which waives the employee’s right to bring a claim against the employer in court, and instead requires that any claims be brought in an arbitration proceeding. Arbitration can be more cost effective and efficient than litigation, and thus can greatly benefit the employer. However, the agreements must be carefully crafted to ensure they are enforceable.

At the moment, one gray area with respect to enforceability involves class and collective actions. Arbitration agreements often limit an employee’s ability to participate in a class or collective action, but the legality of this practice is in question. Both the Seventh Circuit and the Ninth Circuit have found that requiring employees to waive their rights to pursue class or collective actions is an unfair labor practice under the National Labor Relations Act (“the Act”). This is because the waivers are perceived as violating the employees’ rights to engage in “concerted activity,” a cornerstone of the Act. However, not all circuit courts agree; the Fifth Circuit has held that class and collective action waivers in arbitration clauses do not violate the Act.

The good news is that this particular gray area should soon be resolved by the Supreme Court. The Supreme Court will be hearing three consolidated cases involving this issue in October 2017. We will continue to keep you updated on this important issue for employers.

BLOG DISCLAIMER

The postings on this blog were created for general informational purposes only and do not constitute legal advice or a solicitation to provide legal services.  Although we attempt to ensure that the postings are complete, accurate, and up to date, we assume no responsibility for their completeness, accuracy, or timeliness.  The information in this blog is not intended to create, and receipt of it does not constitute, a lawyer-client relationship.  Readers should not act upon this information without seeking professional legal counsel.

This blog may contain links to independent third party websites and services, including social media. We provide these links for your convenience, and you access them at your own risk.  We have no control over and do not monitor the content or policies (including privacy policies) of these third-party websites and have no responsibility for, and no liability with respect to, their content, accuracy, or reliability.  Unless expressly stated, we do not endorse any of the linked websites or any product, service, or publication referenced herein or therein.  We will remove a link to any site from this blog upon request of the linked entity.

We grant permission to readers to link to this blog so long as this blog is not misrepresented. This site is not sponsored or associated with any other site unless so identified.

If you wish for Wilentz, Goldman & Spitzer, P.A., to consider representing you, please obtain contact information from the Contact Us area of this blog or go to the firm’s website at www.wilentz.com.  One of our lawyers will be happy to discuss the possibility of representation with you. However, the authors of Wilentz blogs are licensed only in New Jersey and/or New York and do not wish to represent anyone who viewed this site in a state where the site fails to comply with all laws and ethical rules of that state.

PRIVACY POLICY