March 22, 2017
Today marks the third day of the confirmation hearing for U.S. Supreme Court nominee Neil Gorsuch. Many employers throughout the Carolinas are watching the process with interest given the impact Judge Gorsuch would have on key labor and employment cases pending before the Supreme Court, most notably regarding the validity of class action waivers in arbitration agreements with employees.
Employers often require employees to pursue claims in arbitration, instead of in court, either as part of an employment application containing an arbitration provision or as a standalone agreement. These arbitration agreements long have been enforced by courts under the Federal Arbitration Act. More recently, as a result of several cases before the Supreme Court relating to various business settings, employers have begun including class and collective action waivers in the arbitration agreements, mandating that an employee only bring a claim in his individual capacity and not on behalf of a group or class of employees.
Many employees have challenged the waivers by bringing collective actions under the Fair Labor Standards Act and other laws, alleging various wage and hour violations on behalf of themselves and other similarly situated employees. As employers have sought to enforce the waivers, the majority of federal appellate courts across the nation have ruled in their favor. Nevertheless, the National Labor Relations Board and a few federal appellate courts have taken the position that the class and collective action waivers violate the National Labor Relations Act, specifically employees’ rights to engage in concerted activity. Although the Fourth Circuit Court of Appeals, which governs North and South Carolina, has not addressed the issue, many district courts throughout the Fourth Circuit have enforced the class action and collective action waivers.
As a result of the split among appellate courts, on January 13, 2017, the Supreme Court granted certiorari in three cases where class action waivers are at issue: National Labor Relations Board v. Murphy Oil USA (No. 16-307), Epic Systems Corp. v. Lewis (No. 16-285), and Ernst & Young LLP v. Morris (No. 16-300), consolidating them for oral argument. However, the current eight-member court faces the real risk of ending up in a 4–4 tie on this critical question, leaving it unresolved and the courts of appeals split. Thus, assuming Judge Gorsuch is confirmed and participates in these pending cases, he could cast the deciding vote and resolve the class action waiver dispute.
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