Class Waiver Battle Heats Up


The National Labor Relations Board’s position that waivers of the right to bring class or collective actions over employment-related disputes violate the National Labor Relations Act is being rejected by the Trump Department of Justice, even as federal Circuit Courts deepen the split over this issue. The Supreme Court is poised to resolve this issue.

Deepening Circuit Split: In D.R. Horton, the Board first articulated its position that arbitration agreements containing class waivers prevented employees from engaging in concerted activities regarding the terms and conditions of employment – a right that is protected by the NLRA. The Board’s position was rejected by the U.S. Court of Appeals in the 5th Circuit. Other federal appeals courts subsequently weighed in, with the 2nd and 8th Circuits joining the 5th Circuit, while the 7th and 9th Circuits, and now most recently this month, the 6th Circuit, in NLRB v. Alternative Entertainment, Inc., ruling in favor of the Board. In January of this year, the U.S. Supreme Court agreed to hear this issue.

The DOJ’s About-Face: Typically, the DOJ represents federal agencies in cases before the Supreme Court. When the Supreme Court was considering whether to grant certiorari in the case (meaning that it would hear the case), the Obama DOJ filed a brief in support of the Board’s position. On June 16, 2017, however, the Trump DOJ filed a brief reversing its prior position, and now stating that such class waivers could not be precluded by the NLRA, and should be enforced under the Federal Arbitration Act. The DOJ’s brief asserted that its prior position failed to give sufficient weight to the Congress’ policy of enforcing arbitration agreements as set forth in the FAA.

Impact? The DOJ’s switch also means that the Board itself, and not the DOJ, will be arguing the case before the Supreme Court. The lack of the DOJ’s presence and support for the NLRB’s position may have a strong impact on the Supreme Court’s assessment of the issue.