WASHINGTON – The United States Supreme Court's decision to delay its review of the legality of mandatory class action waivers will mean more uncertainty for employers in the near future.
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On Feb. 2, the Supreme Court announced it would delay hearing oral arguments on three consolidated cases, Murphy Oil USA v. NLRB, Lewis v. Epic Systems Corp. and Sutherland v. Ernst & Young LLP until the end of 2017 or the beginning of 2018. All three cases deal with the issue of the legality of mandatory class action waivers.
Mandatory class action waivers are agreements between employers and employees under which employees agree to not pursue claims against their employers that are on a class or collective basis. This means that for employees, their only recourse will be a single-plaintiff arbitration hearing.
The Supreme Court's decision to delay hearing the cases means employers will continue to struggle with uncertainty surrounding the issue for now, said Patrick McMahon, associate and litigation attorney with Foley & Lardner LLP in Chicago.
“Currently there is a circuit split across jurisdictions, and employers have had to deal with that for a few years now,” he said.
However, even with the existing circuit court split, there has been some judicial guidance, McMahon explained.
“Many employers have adapted in the interim depending on where they employ the most workers, and should continue to stay their charted course until a new (U.S. Supreme Court) justice is seated and the case is heard,” he said. “There is no reason employers should not take advantage of the class action waivers in jurisdictions that allow it, even if they currently do not have one on the books right now. In those jurisdictions, the waivers are valid and a benefit to employers. However, they must be aware that this insulation could be removed depending on the resolution of these cases.”
He said employers would be unwise to read too much into the Supreme Court's decision to delay the arguments.
"Many commentators speculated that if Chief Justice (John) Roberts foresaw a split decision, he would push it to the next term,” he said. “A four-to-four split would do nothing to clarify the landscape, and a ninth justice could break that tie. This could be the court signaling its desire to decidedly rule on the issue, but also its inability to do so as an eight-member court.”
For the near future,McMahon said employers will have to decide what level of risk they are willing to live with.
“In those jurisdictions that permit class action waivers, there is no reason employers cannot take advantage of such waivers; however, there is no guidance on the federal level,” he continued. “Some employers, however, may think a wait-and-see approach is more appropriate and forgo including them in employment agreements until the landscape is more certain.
"Including class action waivers can make claims against employers less appetizing to plaintiff’s lawyers because trying employment claims is typically more expensive than bringing claims as a class. The waivers are most often understood as a way to insulate against class liabilities, not create them.”