On January 13, 2017, the United States Supreme Court agreed to resolve the question of whether class action waivers in the employment context violate the National Labor Relations Act (“NLRA”). The decision will have far-reaching consequences for retailers who include such waivers in employee arbitration agreements in an effort to limit class action exposure.
The Supreme Court granted certiorari in three cases – Murphy Oil USA, Inc. v. N.L.R.B., 808 F.3d 1013 (5th Cir. 2015), Lewis v. Epic Sys. Corp., 823 F.3d 1147 (7th Cir. 2016) and Morris v. Ernst & Young, LLP, 834 F.3d 975 (9th Cir. 2016) – from the Fifth, Seventh and Ninth Circuits, respectively. While the Fifth Circuit held that class action waivers in employee arbitration agreements are permissible under the NLRA, the Seventh and Ninth Circuits both went the other way.
But the split reaches beyond those three Circuits. The Second and Eighth Circuits have agreed with the Fifth Circuit’s view that class action waivers in the employee arbitration agreements do not violate the NLRA.
Given the specter of potential exposure that class actions carry, the Supreme Court’s decision will have tremendous implications for retailers and provide them with guidance when managing the risks associated with employee agreements.