Before the lame duck period of the 115th Congress, Rep. Jerrold Nadler (D-NY) and a group of 58 Democrat co-sponsors, introduced the Restoring Justice for Workers Act (H.R. 7109), which would prohibit employers from requiring employees to sign mandatory arbitration agreements.
The National Labor Relations Board (“Board”) has taken the first step to potentially reshape labor law since the May 21, 2018 Epic Systems case, in which the Supreme Court held that class waivers in arbitration agreements do not violate the National Labor Relations Act (“Act”).
On August 15, 2018, the Board vacated its decision and order in Cordúa Restaurants, Inc., 366 NLRB No. 72 (April 26, 2018), where a three-member panel of the Board held that an employee engaged in concerted, protected activity by filing a class action wage lawsuit against his employer.
The Board’s recent vacating of this order is noteworthy for two reasons.
The United States Supreme Court has agreed to take a closer look at the enforceability of arbitration agreements that bar representative claims brought under PAGA, a California law that allows individual employees to police labor code violations.
On September 8, 2021, the House Education and Labor Committee issued proposed legislation in connection with the House’s new spending bill. Among other pro-union proposals issued in connection with the Protecting the Right to Organize (PRO) Act, the proposed legislation seeks to amend the National Labor Relations Act (NLRA) by banning class and collective action waivers.
The proposed legislation, which can be found here, says that no employer shall “enter into or attempt to enforce” any express or implied agreement not to “pursue, bring, join, litigate, or support any joint, class, or collective claim” arising from the employment relationship. This is unwelcome news to employers who rely on class and collective action waivers in their arbitration agreements.
Since the Supreme Court’s 2018 Epic Systems ruling, employers increasingly rely on arbitration agreements for more efficient resolution of both single plaintiff and class action claims. Prolonged judicial review of arbitration awards, however, can dilute that efficiency. As a result, some employers include waivers of judicial review, in whole or in part, in their arbitration agreements.
But are such waivers permissible? In a recent decision, the Fourth Circuit said “yes” as it relates to appellate review.
Continue Reading Fourth Circuit Holds that the Federal Arbitration Act Does Not Prohibit Parties from Waiving Appellate Review
In Cordúa Restaurants, Inc., 368 NLRB No. 43 (2019), the National Labor Relations Board (“Board”) issued its first major decision following the Supreme Court’s 2018 ruling in Epic Systems, addressing a number of issues of first impression and providing guidance on the permissible scope and implementation of class action waivers.
In Cordúa, a group of employees had filed a collective action under the FLSA. In response, the employer promulgated and maintained a revised arbitration agreement, requiring employees to agree not to opt in to class or collective actions. In distributing the revised agreement, the employer explained that employees would be removed from the work schedule if they declined to sign it. In addition, another employee was discharged for filing a class action wage lawsuit against the employer and discussing wage issues with his fellow employees.
In a recent case, Correia v. NB Baker Electric, Inc., the California Court of Appeal held that employers cannot require employees to arbitrate their representative claims under the California Private Attorney General Act of 2004 (“PAGA”), Labor Code § 2699 et seq., without the State’s consent.
In Correia, two former employees sued their employer, NB Baker Electric, Inc. (“Baker”), alleging wage and hour violations and seeking civil penalties under PAGA. Baker petitioned the trial court for arbitration pursuant to the parties’ arbitration agreement, which provided that arbitration would be the exclusive forum for any dispute and which prohibited employees from bringing “any class action or representative action” in any forum.
As we previously reported, the United States Supreme Court held this past Term in Epic Systems Corp. v. Lewis that class action waivers in arbitration agreements do not violate the National Labor Relations Act. In the wake of Epic Systems, courts have found that class action waivers are likewise permissible under the FLSA. These cases make clear that class action waivers are here to stay.
As we wrote about last month, on May 21, 2018, the Supreme Court rendered its decision in Epic Systems Corp. v. Lewis, 138 S. Ct. 1632 (2018), rejecting perhaps the largest remaining obstacles to the enforcement of class action waivers in arbitration agreements in the employment context. The Court concluded that the class action waivers did not violate the National Labor Relations Act (“NLRA”). Although the Court’s opinion also seemed dispositive of whether such agreements could be avoided under the Fair Labor Standards Act (“FLSA”), at least one claimant tried to continue to litigate the issue, which was disposed of last week in Gaffers v. Kelly Servs., Inc., No. 16-2210 (6th Cir. 2018). And now the Sixth Circuit has addressed whether Epic Systems would apply to arbitration agreements with putative independent contractors who contended that they should have been treated as employees.
On May 21, 2018, the United States Supreme Court issued its decision in Epic Systems Corp. v. Lewis, holding that the National Labor Relations Act (“NLRA”) does not prohibit the use of arbitration agreements with class/collective action waivers covered by the Federal Arbitration Act (“FAA”). The Sixth Circuit has now concluded in Gaffers v. Kelly Services, Inc. that the Fair Labor Standards Act (“FLSA”), like the NLRA, does not bar the use of arbitration agreements with class/collective action waivers.