From JDSupra, Richard Reibstein discusses the Supreme Court’s taking a look at whether class action waivers in arbitration agreements violate the NLRA and argues that an arbitration with a class action waiver may be enforceable anyway if it provides an opt-out clause that allows the worker to opt out of arbitration within a specified period of time. Richard writes:
On the other hand, what if the Supreme Court holds that the NLRA is violated by mandatory arbitration agreements with class action waivers and finds that the FAA does not override the NLRA? In that event, such arbitration agreements will not be enforceable, and employees and independent contractors claiming they have been misclassified will be able to bring and maintain wage, discrimination, and other types of lawsuits on a class or collective action basis – unless the company’s arbitration clause with a class action waiver includes a state-of-the-art “opt-out” clause.
Opt-Out Clauses Are Likely to Moot Any Argument That Such Agreements Are Unenforceable
If an employee or independent contractor can “opt out” of the arbitration agreement within a specified period of time, the agreement is no longer mandatory in nature because the employee or independent contractor has a choice whether to accept the clause or not. Savvy companies have already figured this out and have included an opt-out provision in their arbitration agreements to protect against a possible invalidation of class action waivers by the Supreme Court.
While the Obama-era NLRB has said that an opt-out clause may also violate the NLRA, that position is likely to change under an NLRB soon to be comprised of a Republican majority of its five Board members. Further, the federal courts have generally found that opt-out clauses in arbitration clauses with class action waivers defeat the argument that a class action waiver violates the NLRA.
In any event, there are ways to carefully draft opt-out provisions that would likely survive scrutiny even under the current NLRB decisions from the Obama era.
Thus, those companies using arbitration agreements containing a state-of-the-art opt-out clause are not likely to be the least bit nervous about the upcoming Supreme Court decision, as it only deals with mandatory arbitration clauses with class action waivers. Whatever the decision, it is unlikely to have any application to them. Nor should companies that have enhanced their compliance with employment and independent contractor laws be concerned about the eventual decision by the Supreme Court of the cases being heard tomorrow.
