Justice Department Switches Sides on Class Action Waivers

Earlier this year, we blogged about the United States Supreme Court’s decision to consider whether requiring employees to agree to arbitration and a waiver of their rights to assert claims through class actions violated the National Labor Relations Act (NLRA).  During the Obama administration, the U.S. Department of Justice supported the position of the National Labor Relations Board (NLRB) that requiring class action waivers as a condition of employment violated the NLRA.  Now, the Justice Department has switched sides and is supporting business, acknowledging in an amicus brief filed with the Supreme Court on June 16 that “[a]fter the change in administration, . . . [it] reconsidered the issue and has reached the opposite conclusion.”

The cases being considered by the Supreme Court are National Labor Relations Board v. Murphy Oil USA, Case No. 16-307,  Epic Systems Corp. v. Lewis, Case No. 16-285, and Ernst & Young LLP v. Morris, Case No. 16-300.  The Supreme Court’s decision will directly affect violations of employment laws, like the Fair Labor Standards Act (FLSA) and Title VII of the Civil Rights Act of 1964, as amended.   Oral argument in these cases is scheduled for October 2017.

Although courts of appeal are split on the issue, the Second Circuit Court of Appeals (which covers New York, Connecticut, and Vermont) has previously held that class action waivers do not violate the NLRA.  As a result, such waivers are currently legal in New York, Connecticut and Vermont.

Stay tuned for more developments.