Supreme Court to Decide Whether NRLB Ban On Class Action Waivers In Arbitration Agreements Is Legal

January 24, 2017

Last week, the Supreme Court agreed to consider the National Labor Relations Board's position that arbitration agreements are illegal under federal labor law if they contain class action waivers, setting up a showdown on an issue that has divided circuit courts.  The justices agreed to hear three cases, one which involved a case (Murphy Oil) where the Fifth Circuit Court of Appeals overturned the NRLB’s invalidation of the company's arbitration agreements.  The two other circuit court decisions (Seventh and Ninth Circuits) sided with the NLRB on the issue.  Over the past few years, the NLRB has issued a number of decisions invalidating arbitration agreements because they contained class waivers despite continuing legal challenges, holding that they violated the right of employees to engage in "concerted activities."  The Court’s decision could add greater clarity to that right, which the Obama NLRB has construed very broadly in several contexts.