Trump Reverses Obama Stand, Supports Employers Requiring Class Action Waivers

By | June 19, 2017

The Trump administration on Friday sided with employers in a Supreme Court case over the rights of workers to bring class action lawsuits against companies, court documents showed.

Reversing a position staked out earlier by the Obama administration, which backed employees, the administration said in a court filing it would no longer defend the position of the National Labor Relations Board (NLRB) that employment agreements requiring workers to waive their rights to bring class action claims are invalid.

The waivers compel workers to individually arbitrate disputes with their employers rather than bring collective lawsuits with their co-workers.

The NLRB, an independent agency in the federal government, said in letter to the court on Thursday that its own lawyer would represent the board in the employees’ class action rights case.

It is unusual for the government to change positions in a case already pending at the Supreme Court, and marks a sharp break from the administration of former President Barack Obama, a Democrat, which had originally pursued the case on behalf of the NLRB.

The NLRB currently has a Democratic majority, isolating it politically from the Republican Trump administration.

In January the Supreme Court agreed to review three lower court rulings, including one involving global professional services firm Ernst & Young, over the legality of the waivers. Employers have increasingly required workers to sign them as part of their arbitration agreements to guard against the rising tide of worker lawsuits seeking unpaid wages.

In Friday’s court filing, acting U.S. Solicitor General Jeffrey Wall said the Supreme Court should find that class action waivers are legal and enforceable under federal law. Workers that waive the right to collective litigation cannot “escape the consequences of that choice,” he said.

Companies say the waivers allow for speedier and more cost-effective resolution of workplace disputes. Class action litigation, on the other hand, is harder to fight and can lead to large damages awards.

Workers argue that pursuing their cases individually is prohibitively expensive and, without the prospect of large damages awards that class action litigation can lead to, lawyers will be deterred from taking their cases.

The nine Supreme Court justices are expected to issue a ruling on the issue in the court’s next term, which starts in October and ends in June 2018.

(Reporting by Alison Frankel, Robert Iafolla, Andrew Chung and Lawrence Hurley; Editing by Tom Brown)


Topics Lawsuits Commercial Lines Business Insurance

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