In an important ruling, Morris v. Ernst & Young, the U.S. Court of Appeals for the Ninth Circuit held that employment contracts requiring employees to arbitrate suits individually, rather than on a class or collective basis, violate employees’ right to engage in “concerted activity” under the National Labor Relations Act (NLRA). The decision is one of several in the past few months invalidating class action waivers in employment agreements.
Employees of Ernst & Young brought a class action in federal court alleging the accounting firm denied them overtime wages in violation of the Fair Labor Standards Act (FLSA) and California labor laws. In the district court, Ernst & Young successfully moved to compel individual arbitration because the employment contract required employees to arbitrate disputes in “separate proceedings,” and the action was dismissed. The Ninth Circuit, however, reversed.
Writing for himself and Judge Hurwitz, and over the dissent of Judge Ikuta, Chief Judge Thomas concluded that an employer violates § 7 and § 8 of the National Labor Relations Act by requiring employees to sign an agreement precluding them from bringing, in any forum, work-related legal claims together. The court agreed with the National Labor Relations Board that the NLRA establishes a federal right of employees to pursue work-related legal claims together in some forum—arbitration, court, or elsewhere.… Read more