By: Rubeena Sachdev
On May 21, 2018, the Supreme Court of the United States ruled in favor of upholding employment arbitration contracts. In a 5-4 decision, the Court ruled that class action waivers do not violate the National Labor Relations Act (NLRA) and are enforceable under the Federal Arbitration Act (FAA). Section 7 of the NLRA gives employees the right “to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” Prior to Monday’s decision employers could have been held to violate Section 7 by requiring employees to sign arbitration agreements that waived collective or class-based claims.
The Court ruled that the right to bring a joint, collective, representative, or class-based claim is not regarded as a concerted action within the protection of the NLRA, and therefore, requiring arbitration of employment-law claims does not violate the NLRA. The Court stated that concerted activity protected by the NLRA includes employees’ rights to organize unions and bargain collectively, but not to bring class actions. While the law continues to develop in this area, the holding protects employers and minimizes the threat of expensive litigation that an employer would incur because of class actions brought by employees.
Below are important takeaways that employers need to consider following this decision:
If you would like for our office to review your current arbitration agreements or draft and implement new arbitration provisions within your existing agreements, please contact us at info@chugh.com, and we will connect you with one of our attorneys to best serve your needs.
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