Tag Archives: Mandatory Arbitration Agreements

Tech Industry Employees Protest for End to Mandatory Arbitration

Contributed by Michael Faley, January 24, 2019

Arbitration title on legal documents

In November, thousands of Google employees walked out of work in protest against the company’s practice of compelling mandatory arbitration in sexual harassment claims. Frequently referred to as “forced arbitration” in the context of the current debate, Google responded by modifying its new hire letters to make mandatory arbitration optional for sexual harassment and assault claims. Several other big-name tech companies followed suit and ended the practice for sexual harassment claims.   

Now on the heels of that initial success, tech industry employees are pushing for an end to all mandatory arbitrations for employee-related claims. Last week, protestors, organized under a group called Googlers for Ending Forced Arbitration, conducted a massive social media campaign pressing Google and other tech companies to eliminate their mandatory arbitration schemes for employee claims. Members of Googlers for Ending Forced Arbitration argue that mandatory arbitration schemes lack transparency and enable misconduct against employees. They view going to court as the solution, and demand that arbitration always be optional. In addition, they seek elimination of onerous confidentiality requirements and want an end to class-action waivers so employees can file similar claims together. 

So far, neither Google nor the other targeted tech giants have signaled a willingness to change their current mandatory arbitration schemes beyond the recent modification for sexual harassment claims. However, groups such as Googlers for Ending Forced Arbitration do not appear to be letting up either. Undoubtedly, the scope and general use of mandatory arbitration clauses will continue to be a hot topic of debate in 2019.

Are Mandatory Arbitration Agreements Headed for the Supreme Court?

Contributed by Carlos Arévalo, October 25, 2016

This past June, our blog reported on the Seventh Circuit’s decision in Lewis v. Epic Sys. Corp., 823 F.3d 1147 (7th Cir. 2016), which found that the Federal Arbitration Act does not require enforcement of an arbitration agreement based on the employee’s right under the National Labor Relations Act (NLRA) to engage in protected concerted activity. Specifically, in Lewis the Seventh Circuit held that employment arbitration agreements that include class action waivers violate the NLRA and cannot be enforced. This was the first time that a circuit court had adopted the NLRB’s position in D.R. Horton, Inc., 357 NLRB 184 (January 3, 2012).

Gavel2A couple of months later, the Ninth Circuit, in Morris v. Ernst & Young, LLP, (9th Cir. (Cal.) August 22, 2016), followed suit and also found that an arbitration agreement that required employees to bring claims in “separate proceedings,” thereby prohibiting class and collective actions, violated the employees’ right to engage in concerted activity under the NLRAJust like in Lewis, the employees in Morris had to sign arbitration agreements as a condition of employment. Stephen Morris subsequently filed a class and collective action against the company, alleging he and others had been misclassified as employees exempt from overtime under the Fair Labor Standards Act and California state law. In response, the employer filed a motion to compel arbitration pursuant to the agreements the employees had signed. The district court ordered individual arbitration for each and dismissed the complaint. The Ninth Circuit, however, reversed and held that such agreements interfere with the employees’ rights under Sections 7 and 8 of the NLRA regarding concerted activity.

Back in 2013, three circuit courts ruled that the NLRA does not prohibit class waivers. First, the Eighth Circuit ruled that class waivers were appropriate in Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th Cir. 2013). The Second Circuit did likewise in Sutherland v. Ernst & Young, 726 F.3d 290 (2nd Cir. 2013).  Finally, the Fifth Circuit reversed the NLRB’s decision that such agreements were unenforceable in D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013). Then, in 2014 the Eleventh Circuit arrived at the same conclusion and upheld class waivers in Walthour v. Chipio Windshield Repair, LLC, 745 F.3d 1326 (11th Cir. 2014).

Certainly, this split among circuits makes it more likely that the Supreme Court will soon address whether employees will be able to waive their right to participate in collective actions if they choose to sign arbitration agreements. Indeed, petitions for writs of certiorari seeking review by the Supreme Court were filed in Lewis on September 2nd and in Morris on September 8th. How this issue is ultimately resolved, of course, depends largely on the outcome of the 2016 election.

Irrespective of who fills the vacancy left as a result of Justice Scalia’s passing, employers should still seek labor and employment counsel’s guidance with respect to arbitration agreements to determine if they are enforceable and/or if necessary revisions and amendments are required. Similarly, employers, with counsel’s assistance, should develop new strategies in light of potential changes that may be in the offing.