Significant news for employers whose arbitration agreements have been in limbo for the past six years: A recent ruling by the U.S. Supreme Court majority puts validity back into the contracts, stating that nothing in the National Labor Relations Act trumps the FAA’s requirement that arbitration agreements be enforced.
In 2012, The National Labor Relations Board (NLRB) declared employee-signed arbitration agreements that include class action waivers unlawful. Since then, district courts have been split on the subject, leaving employers and their attorneys “to wade through [a] thicket of competing and inconsistent authority to determine whether class action waivers in arbitration agreements would be upheld.”
These articles provide additional background on the issue and how the new ruling affects employers:
- National Law Review — Finality at Last: Supreme Court Overrules NLRB’s Controversial Policy
- SCOTUSblog — Employers Prevail in Arbitration Case
- Wall Street Journal (Subscriber Only) — Arbitration Wins at the High Court
If you’re an employer that offers arbitration agreements, it’s a good time to review them.
“For employers that currently utilize arbitration agreements with their employees,” says Amy Beckstead, partner at Beckstead Terry PLLC, “it makes sense to add class arbitration waiver language to these agreements, in light of the Supreme Court’s blessing.”