By: Lisanne L. Mikula, Esquire

                    Ruth Loomis: [the Justices posing for a group photograph] Should we smile a little?

                   Justice Dan Snow: Good God, no. Who’d trust a happy Justice?

                   –           First Monday in October (Ronald. Neame – 1981) 

The first Monday in October marks the traditional start of the U.S. Supreme Court’s annual term.  Over the upcoming weeks, the Justices will continue to select the cases the Court  wishes to determine on the merits, but there are already cases which the Court has decided it will consider that could have important ramifications on employment law.

Kicking off the 2017 – 2018 term is a widely watched trio of cases involving the use of arbitration agreements to resolve certain employment disputes.  When the Justices return to the bench on Monday, October 2, they will hear arguments in three consolidated cases – Epic Systems Corp. v. Lewis, Ernst & Young LLP v. Morris and National Labor Relations Board v. Murphy Oil USA – which will require the Court to examine the interplay between two federal laws-the Federal Arbitration Act (“FAA”) and the National Labor Relations Act (“NLRA”).

Each of the cases involves wage disputes brought by employees who were subject to arbitration agreements which provided that all disputes with the employer must be submitted to arbitration and which prohibited the employee from filing a class or collective action.   The FAA provides that arbitration agreements “shall be valid, irrevocable, and enforceable.”  The NLRA provides that employees have the right to engage in “concerted activities” for “mutual aid or protection.”  The Supreme Court will examine whether enforcement of an arbitration clause that requires employees to individually arbitrate disputes with the employer and waives the right to bring a class or collective action infringes on the employee’s right under the NLRA to engage in “concerted activities” for “mutual aid and protection”.

In their Supreme Court briefs on the merits, the employers argue that application of the FAA is “unequivocal” because Section 2 of the FAA provides that arbitration provisions “must be enforced.”  The employers argue that in cases involving the FAA, the Supreme Court has ruled that the FAA’s “unequivocal” command to enforce arbitration agreements “will yield only when it has been overridden by a contrary congressional command in another federal statute.”   The employers argue that because the NLRA does not refer to class proceedings and the history of the NLRA does not indicate that Congress wanted the NLRA to limit arbitration agreements, the NLRA contains no “congressional command” which prohibits the enforcement of an arbitration agreement.

The National Labor Relations Board (“NLRB”) and the employees, by contrast, argue that although Congress intended under the FAA that arbitration agreements would be enforced the same way that other contracts are, that does not mean that arbitration agreements are entitled to more protection than regular contracts.  Instead, they argue, just like normal contracts, agreements to arbitrate will not be enforced when they are illegal. The NLRA’s protection of the right of employees to engage in “concerted activities” for “mutual aid or protection” has long been understood to include the right of employees to pursue joint legal claims; therefore, class waivers like the ones at issue in this case are illegal and unenforceable.

The resolution of this dispute carries significant ramifications in the employment field, as evidenced by the volume of “friend of the court” briefs supporting each side in the dispute – 17 supporting the employers and 11 supporting the NLRB and the employees.  The cases, however, have drawn attention for another unusual procedural matter-which governmental agency will argue in support of the NLRB before the Court.

When the NLRB filed its petition for certiorari in September 2016, it was represented by the U.S. Solicitor General’s Office, which urged the Justices to enforce the employee’s rights to act collectively to enforce their employment rights, irrespective of the provisions of any arbitration agreement.   In June of this year, however, the Solicitor General’s Office filed a “friend of the court” brief on behalf of the United States in which it supported the employers, stating that although that office had previously filed a certiorari petition on behalf of the NLRB, “defending the Board’s view that agreements of the sort at issue here are unenforceable,” the office – in the wake of the change in administrations – had “reconsidered the issue and reached the opposite conclusion.”    The NLRB has since been authorized to represent itself before the Court – creating the very real possibility that an attorney representing the federal government will be arguing against an attorney for a U.S. government agency.

The dispute over employment-related arbitration agreements marks only the first significant employment case which the Justices will hear this term.  Following an internal conference held during the last week of September, the Justices agreed to review the case of Mark Janus, an Illinois state employee, who argues that the First Amendment rights of a public-sector employee are violated when the employee is forced to pay a union fee to cover the costs of contract negotiations.   Janus argues that issues related to contract negotiations – like salaries, pensions and benefits for government employees – are inherently political and, therefore, his fee is going to support speech that is intended to affect the government’s policies, even if he disagrees with it.

The Justices also decided to hear a case which was previously before the Supreme Court in 2016.  In its earlier decision in Encino Motorcars v. Navarro, the Supreme Court threw out a decision by the U.S. Court of Appeals for the 9th Circuit, which had concluded that “service advisors” at car dealerships were not covered by an exemption in the Fair Labor Standards Act from overtime for “any salesman” “primarily engaged in selling or servicing automobiles.” The Justices determined that the 9th Circuit should not have deferred to a Department of Labor (“DOL”) regulation because the DOL had not provided a sufficient explanation for its decision to reverse course from its earlier position treating service advisors as exempt.  The Supreme Court sent the case back to 9th Circuit, ordering it to interpret the FLSA “without placing controlling weight on” the DOL regulation; however, the 9th Circuit once again ruled that service advisors were not exempt from overtime. The Supreme Court will now review the merits of that decision.

The attorneys at the Law Firm of DiOrio & Sereni, LLP can help you. Contact Lisanne L. Mikula, Esquire at 610-565-5700, or send her an e-mail at [email protected].

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