Publication

"Are Class Waivers Enforceable?  The Circuits are Split"

May employers prevent employees from bringing class or collective actions to enforce employment rights?
The circuit courts are split on this issue.  The U.S. Court of Appeals for the Fifth Circuit recently held that class waiver provisions are enforceable because (i) class action procedures are not a substantive right under the National Labor Relations Act (NLRA), and (ii) arbitration agreements must generally be enforced under the Federal Arbitration Act (FAA) unless they violate a congressional command or contract law.  In so holding, the court rejected a decision of the National Labor Relations Board (the Board) that class waivers are a violation of an employee’s right to engage in “concerted activities” under the NLRA.  The Fifth Circuit’s opinion is consistent with prior decisions by the U.S. Courts of Appeals for the Second and Eighth Circuits. 

By contrast, the U.S. Courts of Appeals for the Seventh and Ninth Circuits have endorsed the Board’s position that class waivers are unenforceable because they violate the NLRA.  Furthermore, the Ninth Circuit held that because class waivers violate a statute – the NLRA – they satisfy an exception to the FAA’s general rule that arbitration agreements must be enforced according to their terms. 

The Board and several employers have petitioned the U.S. Supreme Court for a writ of certiorari on the issue, and a ruling by the Court could provide nationwide clarity, resolving the circuit split.

 

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