Employment Alert: U.S. Supreme Court To Decide Whether Employers Can Enforce Class Action Waiver Clauses

by | Nov 3, 2017 | Labor & Employment | 0 comments

With increasing frequency employers are being sued on a class basis, particularly with respect to alleged wage and hour violations.  The mere filing of a class action with the potential risk of large liability often creates hydraulic pressure to settle even if an employer has viable defenses.  Many employers have, therefore, required employees to sign class action waivers as a condition of employment.  In this manner, an employee can enforce his or her legal rights in court, but simply not on a class basis.  However, the enforceability of such class action waiver clauses is unclear. For instance, a New York court decided earlier this year in Gold v. New York Life Insurance Co. that contract clauses barring employees from commencing class, collective and other representative actions against their employers are not enforceable because they violate the National Labor Relations Act (NLRA).

The U.S. Supreme Court recently heard oral argument in the case of NLRB v. Murphy Oil USA, Inc. to determine whether an employer can legally implement and enforce a class action waiver as a condition of employment.  If the Supreme Court determines that such provisions are enforceable, most employers should give serious consideration to requiring employees to enter a class action waiver as a condition of employment. On the other hand, if the Supreme Court refuses to find class action waivers enforceable, then employers will need to consider other options. We will keep you advised on the upcoming decision and best practices moving forward.