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DOJ switches sides in battle over arbitration agreements and class action waivers
By Katherine Fechte on June 19, 2017 at 1:35 PM

Image of the Department of Justice (DOJ) buildingIn what is considered an “unprecedented action,” the Department of Justice (DOJ) has switched sides to argue on behalf of employers, and against the position of the National Labor Relations Board (NLRB), in the U.S. Supreme Court battle over employment agreements mandating arbitration. The DOJ said Friday that it no longer supports workers in the case NLRB v. Murphy Oil, which addresses whether an employment contract that requires the employee to waive his or her right to bring a class-action lawsuit against the employer violates the National Labor Relations Act.

Under the Obama administration, the DOJ backed the NLRB in finding that such agreements violated the federal labor law. However, in the new amicus brief, Acting Solicitor General Jeffrey B. Wall acknowledged that the DOJ originally supported the NLRB's legal theory, but after the change in administrations, the Office of the Solicitor General “reconsidered the issue and has reached the opposite conclusion.” The DOJ now argues that “nothing in the NLRA’s legislative history indicates that Congress intended to bar enforcement of arbitration agreements like those at issue here.” The DOJ further states that, “We do not believe that the Board in its prior unfair-labor-practice proceedings, or the government's certiorari petition in Murphy Oil, gave adequate weight to the congressional policy favoring enforcement of arbitration agreements that is reflected in the Federal Arbitration Act.”

Although it is rare for the DOJ to switch positions in a Supreme Court case, it has happened before in non-labor cases before the court. And while the reaction to the switch has been mixed, most are convinced the Supreme Court will decide the mandatory arbitration issue based on its own statutory interpretation, and not just in the way the United States urges it to do so.

Murphy Oil is one of three arbitration cases on the Supreme Court’s docket. Although briefing has not been completed in any of the three cases, and the court has not scheduled oral arguments, it is expected to issue its ruling sometime in its next session. If the Supreme Court agrees with the NLRB and finds these agreements violate the NLRA, many employers will need to revise their employment contracts and handbook provisions requiring that employees waive class actions and arbitrate their work-related claims, including those regarding wage and hour issues.

If you have any questions about the DOJ’s change in position or what the implications of the Supreme Court’s decision could be, please contact one of the attorneys in our Employment & Labor group.

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