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A federal appeals court ruled that a company may lawfully require employees to waive a class action in their employment agreements.
In Convergys Corporation v. National Labor Relations Board, the divided appellate panel said the company did not violate the National Labor Relations Act. The court said Convergys could require job applicants to sign the waiver and could lawfully enforce it.
Concluding that "the use of a class or collective action is a procedure rather than a substantive right," the U.S. Fifth Circuit Court of Appeals overturned the board's ruling that the waiver interfered with workers' right to band together.
The case focused on an agreement that Convergys requires job applicants to sign. It reads:
"I further agree that I will pursue any claim or lawsuit relating to my employment with Convergys (or any of its subsidiaries or related entities) as an individual, and will not lead, join, or serve as a member of a class or group of persons bringing such a claim or lawsuit."
Despite having signed the agreement, a Convergys employee brought a class action case against the employer in federal court. The company sought to enforce the waiver, but the court denied its motion to strike.
The parties later settled the case, but the NLRB filed a complaint against Convergys for allegedly violating Section 8(a)(1) of the NLRA. An ALJ concluded the company violated the Act, and the Board adopted the recommendation.
Citing its precedent in D.R. Horton, Inc. v. National Labor Relations Board, the Fifth Circuit said it had already decided that a class action could be waived as a procedure rather than a substantive right. The waiver agreement, the majority concluded, must then be enforced according to its terms.
Judge Patrick Higginbotham dissented. Without being in an arbitration agreement, he said, the waiver violated the NLRA.