Wave Goodbye to the Prohibition on Class Waivers

As noted in our December 11, 2013 e-lert, whether the National Labor Relations Act (NLRA) prohibits employers from requiring class and collective action waivers, is far from settled.  A National Labor Relations Board Administrative Law Judge (ALJ) has recently ruled that the Board's stance prohibiting class and collection action waivers could not be sustained in light of the U.S. Supreme Court's recent ruling in American Express Co. v. Italian Colors Restaurants, 133 S.Ct. 2304 (2013).  The ALJ concluded that the provision of the arbitration agreement at issue in AmEx prohibiting class and collection actions was valid and enforceable.  The decision is significant (and unusual) because the ALJ declined to follow current binding Board precedent, which holds that it is unlawful for an employer to require as a condition of employment that employees waive their right to bring class or collective actions in any forum.      

Still, however, we urge caution.  It is yet to be seen how the full Board will address the issue, as at least two other ALJs have reached the opposite conclusion despite arguments that AmEx controlled.  Moreover, it is likely that a challenge – to any ruling of the full Board – will be mounted.  In the meantime, as well as in preparation for what is likely to be the wave of the future, it is imperative for employers to evaluate the language in their current arbitration agreements, as well as assess the potential impact such language will have on future employment claims.             

Given the Board's new found affinity for applying the NLRA to non-union workforces, the importance of an ALJ finding that the AmEx ruling prevents the Board from prohibiting class and collection action waivers in arbitration agreements should not be discounted.  

Whether you currently utilize an arbitration agreement, or would like to consider future implementation, please respond to this email or contact your Elarbee Thompson attorney to discuss how class and collection action waivers could affect your business.