Arbitration Agreements and Labor Rights in the Supreme Court

Date: October 23, 2017

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After a somewhat dull 2015-16 term, the Supreme Court is now hearing blockbuster cases again. And labor issues appear front and center this term. For that matter, one case has garnered a lot of attention in the business community. (We’re not talking about Janus v. AFSCE here—as important as that case may be). Instead, NLRB v. Murphy Oil Co., might be the most consequential case for small business.

The question under review in Murphy asks whether employers can require employees to sign arbitration agreements waiving their rights to bring class action lawsuits? Given the frequency of employment related lawsuits, it’s not surprising that many businesses utilize arbitration agreements. And they have every right to do so under the Federal Arbitration Act—which guarantees that arbitration agreements will be enforced, even in the employment context.

But labor unions and the National Labor Relations Board would like to obliterate employee arbitration agreements–opening businesses up to more lawsuits. In fact, a handful of courts have ruled that class action waivers (in employment contracts) violate the National Labor Relations Act. So, the Supreme Court is now set to resolve this dispute. And NFIB argues in its brief that the Court should affirm the right of employers to use arbitration agreements where employees voluntarily agree.

Small businesses support arbitration because litigation costs more and takes longer in the traditional court setting. Thankfully, oral arguments seemed to go well in the Supreme Court. As noted in this Reuters article, Justice Anthony Kennedy seemed inclined to side with employers here.

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