Several years ago, Stephen Morris, an accountant working for Ernst & Young LLP in California, signed an agreement requiring him to arbitrate claims against the firm on an individualized basis only. In other words, he could not file nor arbitrate a class action claim. He could assert a claim in arbitration, but only on behalf of himself.
After his employment ended, Mr. Morris nevertheless decided to file a lawsuit in federal court on behalf of all similarly-situated employees nationwide alleging wage violations under the Fair Labor Standards Act (“FLSA”) and various California laws. He claimed that the savings clause of the Federal Arbitration Act (“FAA”) eliminated the obligation to participate in a one-on-one arbitration because it violated the National Labor Relations Act (“NLRA”) by preventing him from engaging in concerted activities.
On May 21, 2018 the United States Supreme Court issued a ruling in the case of Mr. Morris and several other persons with similar cases. The court ruled that the FAA requires the courts to enforce arbitration agreements according to their terms, including terms requiring individualized arbitration proceedings. The Court further declared that the NLRA does not displace the FAA.
The significance of this ruling cannot be overstated. Employers and employees can enter into arbitration agreements that require individualized arbitration, and which prohibit class or collective actions.
Join us at our next Legal Beagle Bagel Breakfast at 9 am on Thursday, May 31st to learn about arbitration agreements, what makes them valid, and how this Supreme Court decision will affect workplace litigation in California. Register at [email protected] or call 559.256.5000.
Doug Larsen
Fishman, Larsen & Callister