NLRB Directs Regional Offices to Informally Settle Pending Cases Involving Class Waivers in an Employer’s Arbitration Agreement

Last month, the National Labor Relations Board (“NLRB”) issued a memo directing the agency’s regional offices to informally settle any pending cases involving employers who maintain arbitration agreements that bar workers from engaging in class or collective action when pursuing work-related claims.  The memo was published in response to the United States Supreme Court’s January 13th decision to grant certiorari in NLRB v. Murphy Oil USA, Epic Systems Corp. v. Lewis, and Ernst & Young, et al. v. Morris.  The three cases previously decided by the nation’s 5th, 7th, and 9th Circuit Courts of Appeal are split on the issue of whether class waivers included in an employer’s arbitration agreement are lawful under Section 8(a)(1) of the National Labor Relations Act.

The memo authored by the agency’s Associate to the General Counsel states:

The General Counsel is committed to judicial economy and avoiding undue litigation.  In light of the grant of certiorari and the fact that this significant issue is now before the Supreme Court, the General Counsel has re-evaluated his prior position of proceeding on these matters.  Thus, in cases alleging that the employer is either maintaining and/or enforcing an agreement prohibited by Murphy Oil, Regions, after determining the case has merit, are directed to propose that the parties enter informal settlement agreements conditioned on the Agency prevailing before the Supreme Court in Murphy/Epic/Ernst & Young.    To the extent any charge contains both an allegation that the employer has been maintaining and/or enforcing an unlawful Murphy Oil agreement, as well as an allegation unrelated to said agreement, Regions are to propose that the parties enter into an informal settlement agreement relating to the Murphy Oil allegation(s) conditioned on the Agency prevailing before the Supreme Court.  To the extent charged parties are unwilling to settle the unrelated allegations, Regions should go forward on those found to have merit.   In situations involving opt in/opt out clauses in mandatory arbitration agreements or where it is argued that some other feature of these agreements renders them distinguishable from Murphy Oil, Regions are directed to hold such cases in abeyance.  Other cases may be held in abeyance or motions to stay may not be opposed, depending on the circumstances, and will be considered on a case by case basis.

The question presented in the consolidated case now pending before the Supreme Court is:

Whether arbitration agreements with individual employees that bar them from pursuing work-related claims on a collective or class basis in any forum are prohibited as an unfair labor practice under 29 U.S.C. 158(a)(1), because they limit the employees’ right under the National Labor Relations Act to engage in “concerted activities” in pursuit of their “mutual aid or protection,” 29 U.S.C. 157, and are therefore unenforceable under the saving clause of the Federal Arbitration Act, 9 U.S.C. 2.

At this time, oral argument before the nation’s high court has not yet been scheduled.  The parties currently have until July 27, 2017 to file response briefs on the merits.

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