Wage Law

In Morris v. Ernst & Young, LLP (9th Cir. 2016) ___ F.3d ___, the Ninth Circuit held that the National Labor Relations Act prohibits employers from requiring, as a condition of employment, that employees waive their right to participate in concerted legal claims in the form of a class action.

Ernst & Young required employees to sign agreements saying that they would pursue any legal claims through arbitration, and only as individuals, in separate proceedings, barring the joining of multiple plaintiffs or a putative class in any such arbitration. In fact, the agreement expressly barred any claims to be brought on behalf of any other person. Plaintiffs filed a wage and hour class and collective action in District Court, and the court granted Ernst & Young's motion to compel arbitration. The Ninth Circuit reversed, holding that the agreement’s “separate proceedings” provision violates the essential, substantive right established by the NLRA to participate in concerted activities for the purpose of collective bargaining "or other mutual aid or protection.”  The Court distinguished Johnmohammadi v. Bloomingdale's, Inc. (9th Cir. 2014) 755 F.3d 1072, 1075 by noting that Ernst & Young offered its workers no opportunity to opt out of the agreement. The decision leaves a split between the circuits, with the 7tth Circuit and 9th Circuit holding in favor of employees, and the 2nd, 5th and 8th Circuits siding with the employers.

California, in Iskanian v. CLS Transp. Los Angeles, LLC (2014) 59 Cal. 4th 348, 373, upheld class action waivers, but suggested that in some instances, they could violate the NLRA. Morris would appear to at least offer a distinction, if not a broad limitation of Iskanian, which may give some employers pause when considering whether to cite CAFA and remove a case to District Court, since district courts in California will now be bound to follow Morris.

You can download the full text of Morris here in PDF.