Circuits Split Over NLRB Decisions Finding Class-Action Waivers in Arbitration Agreements Violate the NLRA

The National Labor Relations Board’s (“NLRB”) stance with regard to class-action prohibitions included in employment contracts appears increasingly likely to be reviewed by the United States Supreme Court in the near future.  The NLRB has consistently found that class-action waivers in an employer’s arbitration agreement infringe upon a worker’s right to engage in collective action under the National Labor Relations Act (“NLRA”).  In contrast, the nation’s courts have typically enforced arbitral agreements banning class-actions so long as they are not unconscionable or otherwise unfair to employees.

Earlier this month, an Eighth Circuit panel disagreed with the NLRB and ruled in Cellular Sales of Missouri, LLC v. NLRB, Nos. 15-1620 and 15-1860, that an employer’s class-action waiver included in a mandatory agreement to arbitrate did not violate the NLRA.  Despite this, the court found that the arbitral provision at issue in the case was unenforceable under the NLRA because it was too vague.  The Eighth Circuit’s decision was closely aligned with that of the nation’s Fifth Circuit in D.R. Horton Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013).  In the past, both the Second and Ninth Circuits also issued similar decisions.

About one week earlier, a unanimous Seventh Circuit panel came to the opposite conclusion.  In Lewis v. Epic Systems Corporation, No. 15-2997, the Seventh Circuit found that a mandatory class-action waiver included in an employer’s arbitration agreement violated the NLRA.  According to the circuit court, the NLRA provision at issue was not in conflict with the federal policy favoring arbitration under the Federal Arbitration Act (“FAA”).  The split among circuits is likely to convince the high court to finally address whether class-action waivers in an employer’s arbitration agreement violate the NLRA.

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