Supreme Court Validates Employer’s Right to Require Class and Collective Action Waivers in Employment-Related Arbitration Agreements

The United States Supreme Court ruled today that contracts requiring individualized arbitration of employment-related disputes are enforceable and do not violate Section 7 of the National Labor Relations Act (NLRA). Background Some employers require their employees to enter into agreements binding the parties to arbitrate employment-related disputes.  In recent years, many of those employers have drafted their mandatory arbitration agreements to prohibit employees from pursuing class or collective actions, which can be costly and eliminate the informality and speed of arbitration.  For example, the plaintiffs in the three cases decided by the Supreme Court today agreed not to pursue unpaid overtime claims under the Fair Labor Standards Act (FLSA) on behalf of other employees in class or collective actions. In a reversal of its prior position, the National Labor Relations Board (Board) ruled in 2012 that arbitration agreements including class or collective action…

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