Employers commonly use arbitration agreements to minimize the expense and exposure of employment-related claims. By mandating arbitration of employment disputes, they hope to ensure that these matters are resolved in a cost-effective and confidential manner. Many arbitration agreements go a step further, requiring employees to pursue their claims individually, and to waive their right to proceed on a class or collective basis. Unfortunately, the certainty employers have striven to achieve with such agreements has proven elusive in recent years, as the National Labor Relations Board (NLRB) and several courts have found that class action waivers violate employees’ rights.

Although the U.S. Supreme Court’s 2011 decision in AT&T Mobility LLC v. Concepcion upheld the enforceability of class action waivers in the consumer context, in the years since, the NLRB has repeatedly rejected the use of class action waivers in the employment context. In In re D.R. Horton, the NLRB held that class action waivers inherently infringe on employees’ rights to engage in protected concerted activity under Section 7 of the National Labor Relations Act (Section 7 rights). Since In re D.R. Horton, a split has emerged among the U.S. Courts of Appeal, with the Second, Fifth and Eighth Circuits rejecting the NLRB’s position, the Seventh and Ninth Circuits embracing it, and the Third Circuit expected to weigh in very soon.

Notwithstanding the pronouncements of the Second, Fifth, and Eighth Circuit Courts of Appeal, the NLRB has continued to apply its own view, defiantly issuing rulings it knows cannot withstand appellate scrutiny in these jurisdictions. Last month, in Citigroup Technology, Inc. v. NLRB, the Fifth Circuit reversed an NLRB decision ordering Citigroup to remove class action waivers from its employment arbitration agreements. The matter originated with an unfair labor practice charge filed by former Citigroup employee, Andrea Smith, after the American Arbitration Association rejected one of her coworkers’ requests to arbitrate unpaid overtime claims on a collective basis. Smith’s charge alleged that class action waivers contained in arbitration agreements between Citigroup and its anti-money-laundering operations analysts were unlawful. In 2015, the NLRB agreed with Smith and found the employees had the right to pursue their claims on a collective basis, notwithstanding the terms of their agreements with Citigroup.

Citigroup appealed, relying on well settled Fifth Circuit precedent holding that the Federal Arbitration Act mandates enforcement of the arbitration agreement, including the class action waiver. In its appellate briefs, the NLRB conceded that the Fifth Circuit’s earlier rulings were dispositive of the issue on appeal and effectively precluded enforcement of the agency’s order. Relying on what it described as the NLRB’s “candid—and greatly appreciated—concession,” the Fifth Circuit reversed the NLRB’s decision in a three-page opinion consisting primarily of quotes from the parties’ briefs.

Petitions for writs of certiorari have been filed in multiple cases, requesting that the United States Supreme Court take a stance on the currently unsettled issue of whether class action waivers in the employment context infringe employees’ Section 7 rights. It seems reasonably likely, moreover, that the pro-employee agenda advanced by the NLRB under the Obama Administration will come to an end when President-elect Trump fills NLRB vacancies with more conservative appointees. While conditions are perfect for U.S. Supreme Court intervention, and the change in administration portends substantial policy revisions at the NLRB, what will happen first, and when, remains unclear.