Man's Hands Signing Document --- Image by © Royalty-Free/Corbis

By Scott Huffstetler

Today, the United States Supreme Court decided to consider three decisions involving class-action waivers in employee arbitration agreements.  As background, many employers require employees to sign arbitration agreements.  In these agreements, employees give up the right to sue their employer and agree that all employment related claims will be subject to arbitration.  Many of these agreements contain class-action waivers, in which employees will agree only to bring employment related claims against the employer individually.  Essentially, by signing these agreements, employees waive their right to start or join class or collective actions.  These waivers are particularly important given the recent increase in class or collective employment suits brought against employers under the Fair Labor Standards Act (FLSA) and anti-discrimination laws.  These suits can be very costly and frustrating for employers.  The federal Fifth Circuit, which is the appeals court for federal courts in Louisiana, Mississippi, and Texas, upheld such a class-action waiver in NLRB v. Murphy Oil.  However, in two separate cases, the Seventh and Ninth Circuits, which are the appeals courts for federal courts in Illinois, Indiana, Wisconsin, Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington, held that such waivers violate the National Labor Relations Act’s (NLRA) protection of concerted activity.  The inconsistent law in this area has been troubling for employers with arbitration agreements, especially those operating in multiple jurisdictions.  Hopefully, the Supreme Court’s decision will provide needed clarity for employers who opt to have these agreements.