Supreme Court Considers Validity of Employment Contracts Prohibiting Class or Collective Action

By Douglas L. McSwain

On October 2, 2017, the Supreme Court of the United States heard three combined cases raising an important legal question that likely will affect innumerable employment contracts used in this country.  The Court heard Epic Systems Corp. v. Lewis, Ernst & Young, LLP v. Morris and National Labor Relations Board (NLRB) v. Murphy Oil (USA).  The Court’s ruling in these three cases will determine the validity of arbitration clauses that waive or prohibit the employee from pursuing collective, class or joint actions in court or in arbitration proceedings.

The lower courts have differed on this question, and the oral argument before the Supreme Court indicates the Justices are likely to split in what could turn out to be a closely decided ruling, perhaps with a thin majority of Justices (i.e., potentially a 5-4 decision).  No one knows for sure how the case will be finally decided by the Supreme Court, and predictions about how the Justices will rule, at this juncture, are premature at best.  The questioning that occurred during oral argument seems to suggest

NLRB Rules That Filing a Class or Collective Action Is Protected, Concerted Activity

By Michelle D. Wyrick

Last week, the National Labor Relations Board (“NLRB”) decided in 200 East 81^st Restaurant Corp. d/b/a Beyoglu that “the filing of an employment-related class or collective action by an individual employee is an attempt to initiate, to induce, or to prepare for group action and is therefore conduct protected by Section 7” of the National Labor Relations Act (“NLRA”). The employee in the case, a waiter, testified that he mentioned filing a lawsuit against his employer to one co-worker, who declined to participate in the proposed lawsuit. When the waiter filed the lawsuit, he did not obtain prior authorization from any other employee. On the day the complaint was served on the employer, the employer removed the waiter’s name from the work schedule and asked him if he expected to work while he was filing a lawsuit. The waiter left the workplace and was never told he could return to work. The Administrative Law Judge found that the employer terminated the waiter’s employment in retaliation for filing the lawsuit, on behalf of himself and other similarly situated employees, alleging violations of the Fair Labor Standards Act (“FLSA”).

The dissent disagreed with the majority’s conclusion that an employee’s filing of a class or collective action automatically equates to protected, concerted activity. The dissent noted that not every non-NLRA class or collective claim “triggers an automatic overlay of NLRA rights and restrictions.” In the dissent’s view, the simple act of filing a class or collective action “does not instantly convert the