Epic and Lamps Plus: Employment Contracts, Arbitration Agreements and Class Waivers

Description

The National Labor Relations Board (NLRB) ruled in 2012 that agreements requiring only individual arbitration--that is, barring class or collective arbitration--violated the NLRA and were an unfair labor practice.

Since then, the NLRB has steadfastly held that employers commit unfair labor practices by requiring their employees to sign arbitration agreements that include class action or collective action waivers. Appellate courts divided over whether to uphold the NLRB's conclusions and whether to enforce such provisions.

Last year in Epic Systems Corp. v. Lewis, the U.S. Supreme Court held that employers may include class action and collective action waivers in mandatory arbitration agreements with their employees and that such agreements do not violate the NLRA. This ruling represented a sea change from previous NLRB holdings that agreements requiring only individual arbitration--that is, barring class or collective arbitration--violated the NLRA and were an unfair labor practice.

In April 2019, in Lamps Plus v. Valera, the Supreme Court made clear that Epic Systems was no outlier, holding that a contract drafted by the employer that only ambiguously required individual (and not class) arbitration would not be construed against the employer, again sending employees to individual arbitration.

As a result of these rulings, attorneys representing businesses should take a new look at arbitration agreements and consider (1) modifying existing contracts to include mandatory class action waivers, or (2) designing and implementing arbitration agreements with such waivers for use going forward. Although compulsory arbitration agreements were standard before the ruling, experts project these agreements will become the norm.

Listen as our expert panel discusses the recent Supreme Court decisions, what employers can do to ensure their arbitration programs are enforceable, and new strategies employers can expect to see from plaintiffs' attorneys in light of the anticipated increase in class action waivers.