The Supreme Court’s decision in AT&T Mobility v. Concepcion, issued yesterday, overturned a Ninth Circuit decision and held that class action waivers in arbitration agreements are permissible under the Federal Arbitration Act (“FAA”). Concepcion was a consumer case, but the reasoning is almost certainly applicable in the employment context as well. Yet, amid the buzz on the topic of class action waivers, what comes of employees’ Section 7 rights?
Section 7 of the National Labor Relations Act (“NLRA”) guarantees employees to right to engage in concerted activities for their mutual aid and protection. This right applies to all employees, not only employees who are members of a unionized workforce.
On a number of occasions the National Labor Relations Board (the “Board”) has previously found that the filing of certain types of collective or class actions regarding employment matters is protected concerted activity. For this reason, the Board has taken the position that a mandatory arbitration agreement that could reasonably be read by an employee as prohibiting him or her from joining with other employees to file a class action lawsuit for their mutual aid and protection is unlawful. See General Counsel Memorandum 10-06. However, even the Board recognizes that class action waivers are not per se impermissible under the NLRA, provided Section 7 rights are not impaired.
In fact, the Board opined that the act of pursuing a class claim does not become concerted activity merely because of the incidental involvement of other employees inherent in normal class action procedures. Nor are an employee’s Section 7 rights violated when he or he waives his or her right to pursue an individual right as a class action. Section 7 is only implicated where the employees’ actions are for their mutual aid or protection.
Navigating this distinction when drafting a class action waiver may be complicated. While there may be many ways to handle the issue, the Board recommends including language explicitly stating that the arbitration agreement does not constitute a waiver of employees’ collective rights under Section 7, including the employees’ right to pursue a covered claim in court on a collective or class action basis, and that no employee will be disciplined, discharged or otherwise retaliated against for exercising their rights under Section 7.
Employers need not be wed to the Board’s precise recommendations, but, in the wake of Concepcion, employers rushing to adopt arbitration policies containing a class action waiver would be wise to carve out protections for their employees’ Section 7 rights.