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The Practical Employer

Class-action Waivers Remains a Huge Issue for Employers

The 6th Circuit Court recently joined the battle over over whether the NLRA allows employers to require employees give up their rights to litigate or arbitrate class action suits.
There has been much judicial and administrative ink spilled over the past few years over whether the National Labor Relations Act permits employers to require employees to give up their rights to litigate or arbitrate class or collective actions.
This is one of the most important issues facing employers, which have looked to class-action and collective-action waivers as an important weapon to fight to scourge of wage and hour litigation.
Last week, in NLRB v. Alternative Entertainment [pdf], the 6th Circuit Court joined the battle.
At issue in this case is the following arbitration provision.

By signing this policy, you and AEI also agree that a claim may not be arbitrated as a class action, also called “representative” or “collective” actions, and that a claim may not otherwise be consolidated or joined with the claims of others.

This 6th Circuit concluded that this provision violates Section 7 of the the NLRA, which guarantees to employees the right to engage in protected concerted activity.

The NLRA prohibits mandatory arbitration provisions barring collective or class action suits because they interfere with employees’ right to engage in concerted activity, not because they mandate arbitration. These are grounds that would apply to any contract. …

Ultimately, we conclude that the NLRA is unambiguous and that the statute itself makes clear that the right to concerted activity is a substantive right.

Checking the scorecards, let’s see where we stand on this issue.
Upholding the legality of class-action waivers:
Concluding that the NLRA invalidates class-action waivers:
While the “no’s” have it, in reality, this issue is deadlocked, as the SCOTUS has already agreed to decide this dispute and (hopefully) resolve this issue once and for all. This case will be very interesting to watch, as the Court has already upheld class-action waivers in consumer agreements. It remains to be seen whether layering the NLRA on top of this issue will make a difference to SCOTUS, although I have my doubts.
For now, follow the law of your Circuit, and stay tuned, as we should have some much needed clarity on this issue within the year.
Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. Comment below or email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.