DOJ Backs Class Action Waivers

The United States Department of Justice (DOL) has made an about face and now takes the position that class action waivers in arbitration agreements are enforceable.   The change in position from the Trump Administration’s DOJ has gained national headlines. The Courts of Appeal are split on the enforceability of these waivers, while the National Labor Relations Board maintains they are unenforceable.

The Obama-era DOJ agreed with the National Labor Relations Board’s position that such waivers are unenforceable because they infringe on employees’ collective bargaining rights. The current DOJ, acting in accordance with the executive branch’s policy shift as a result of the presidential election, now takes the position that such waivers are enforceable unless they are inconsistent with arbitration-neutral rules of contract validity.

Employers are understandably excited by this development.  Class action waivers save considerable time and expense by forcing the dispute into a forum that can limit the scope of discovery, and that typically moves much more quickly than court proceedings.  Employers should note, however, that the DOJ does not decide the issue. Rather, the Supreme Court’s decision in three currently pending consolidated cases should resolve the split in appellate courts. The decision will also determine the NLRB’s position.

The appointment of Justice Gorsuch by President Trump and the DOJ’s new found support for class action waivers increase the likelihood that the Supreme Court will uphold class action waivers. If the Court rules such waivers are enforceable, employers should review their employment contracts and arbitration agreements and consider adding waivers designed to save time and litigation costs.  Stay tuned.  A decision from the Supreme Court on class action waivers is expected in late 2017 or early 2018.

This entry was posted in Employment Agreements, National Labor Relations Board (NLRB) and tagged , , , , . Bookmark the permalink.

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