In a 2014 case named Muphy’s Oil, the NLRB held that arbitration agreements barring workers from pursuing class actions are unlawful. Several Circuit Courts have overturned the NLRB’s decision, while two Circuit Courts have upheld it. One of those two courts is the Ninth Circuit. So, when a case came before an Administrative Law Judge where a Ninth Circuit employer required employees to waive their right to class or collective action, the Judge’s job was rather simple. Per the judge, “I am bound to follow board precedent irrespective of contrary opinions by circuit courts, unless and until the Supreme Court makes a definitive ruling on the subject matter in dispute.”
He then provided readers some commentary. For example, he thought it was doubtful many employees would have even understood the meaning of the arbitration provision, which was located at the bottom of a 3-page document and does not even explain the type of charges an employee may bring before the NLRB. The judge continued, “Strictly speaking, the policy does not require employees to execute the proffered ‘Agreement to be bound by Alternative Dispute Resolution Policy.’” “But one has to wonder how many employees, being asked to sign the document, typically at the start of their employment, would have sufficient knowledge to even consider refusing to sign it.”
The issue of whether an employer can lawfully maintain a arbitration agreement barring class or collective action is critically important to companies and workers alike. Since some Circuits have ruled that employers should be allowed to enforce these agreements and some Circuits have ruled them unlawful, this issue will likely be decided by the United States Supreme Court once it has a full complement of 9 justices.
Matt Austin owns Austin Legal, LLC, a boutique law firm based in Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. You can call Matt at (614) 285-5342 or email him at Matt@MattAustinLaborLaw.com.