View Our Practice Areas

Good News for Opponents of Class Action Waivers

A recent August ruling in the 9th Circuit Court of Appeals may have far-reaching benefits for employees. The court struck down the employer's right to prohibit its employees from pursuing group work-related claims against unfair labor practices.

The Case: Stephen Morris and Kelly McDaniel vs. Ernst & Young, LLP

Employees Stephen Morris and Kelly McDaniel worked for financial firm Ernst & Young, LLP. The employees filed a claim together against their employer for not paying overtime as legally required. The problem is that these two had initially signed an employment contract with Ernst & Young that includes a class-action waiver. This means that their employment agreement prohibits them from joining together with other workers to bring legal claims regarding hours, wages, and terms and conditions of work.

The employers and their attorneys argue that this practice violates the National Labor Relations Act (NLRA). The case has made its way through the court appeals system to the 9th Circuit in San Francisco. This court has ruled in favor of the employees, striking down the contract clause.

Class Action Waivers

It has become common practice to include an arbitration clause and a waiver against joint litigation in employment contracts. It essentially stops workers from banding together to seek legal recourse against their employers' misconduct. The problem with this for employees is the lack of clout they have when pursuing claims individually. Class-action suits typically have far greater impact, and can more easily force employers to make needed changes to their faulty employment practices.

The NLRA is a federal law that gives employees the right to pursue legal claims collectively. But Supreme Court precedent has been on the side of the employers. Ernst & Young relied on Federal Arbitration Act (FAA) law, claiming this supersedes the NLRA. But at issue is the collective action, not the arbitration.


It's too early to celebrate. Court rulings vary on this matter. The 5th Circuit has repeatedly ruled that class waivers are legal. Ernst & Young will likely appeal, and the case may very well eventually end up with the U.S. Supreme Court. But for now, at least the issue is at the forefront again. And this is a good thing, because this issue needs attention. Employee rights are crucial in the workplace, and in ensuring that they receive fair and legal treatment during the course of their employment. Collective legal action has proven time and again to be a necessary catalyst for change.

If you have been treated unfairly in the workplace, are experiencing harassment, discrimination or your rights are being violated, turn to an employment lawyer experienced in California labor and employment law to protect your rights.


No Comments

Leave a comment
Comment Information
Back to top