Class Action Waivers in Employment Arbitration Agreements - Is the End Near?

Over the past five years, more and more employers across the country have been requiring
their employees to sign class or collective action waivers as a condition to employment. By
doing so, employers are effectively prohibiting employees from filing class actions, thereby
stripping them of invaluable rights to pursue collective relief against their employers.
However, this trend may finally be coming to an end.

A few weeks ago, the United States Court of Appeals for the Seventh Circuit held in Lewis v.
Epic Systems Corp., No. 15-2997, 2016 WL 3029464 (7th Cir. May 26, 2016) that a class or
collective action waiver in the employment context is illegal and, therefore, unenforceable.
The Seventh Circuits reasoning was fairly straightforward. Chief Judge Diane Wood wrote
in the unanimous opinion that a waiver of class or collective action as a condition of
employment clearly violates Section 7 of the National Labor Relations Act, 29 U.S.C. 157,
which protects employees rights to concerted activity. Because of such legal violation, any
such waiver in an arbitration agreement governed by the Federal Arbitration Act (the
FAA), would be deemed unenforceable, pursuant to the FAAs rule that renders such
agreements invalid upon such
grounds as exist at law or in equity
for the revocation of any contract.

However, this holding is directly at

odds with the holdings of other
Circuit Courts who have relied on the
seminal 2011 United States Supreme
Court case of AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) in finding such class
or collective action waivers enforceable. In Concepcion, the Supreme Court held that class
action waivers in arbitration agreements governed by the FAA were enforceable, at least in
the consumer context. Although Concepcion did not discuss the enforceability of class action
waivers in the employment context, most state and federal courts have until now interpreted
Concepcion broadly to apply equally to class action waivers signed by employees, meaning
that such waivers are also enforceable pursuant to the FAA. The Seventh Circuit has now
held just the opposite, creating a circuit split among the federal appellate courts.

This circuit split will hopefully lead to the United States Supreme Court reviewing this issue
and clarifying the law in this important area of employee rights. However, the Supreme Court
regularly turns down approximately 99% of cases that are sought to be reviewed by the
highest court. In any case, the Seventh Circuits decision in Lewis can be viewed as a step
forward for employees, and time will tell us what is to result from it.

To learn more please visit Rushovich Mehtani LLP www.rmlawpartners.com.