eLABORate: Fifth Circuit Holds Employees Do Not Have a Right to Class Actions Under the NLRA

August 16, 2017

In two recent rulings, the United States Court of Appeals for the Fifth Circuit held that Section 7 of the National Labor Relations Act (“NLRA”) “does not confer a substantive right to participate in class or collective action litigation.” Class or collective actions allow large groups of employees to collectively pursue similar employment-related lawsuits in court. Such actions are popular with the plaintiffs’ bar, and dreaded by employers because of the increased defense costs and potential liability from such litigation.

The Court rejected the conflicting view to which the National Labor Relations Board (“NLRB”) has “persistently clung” that Section 7 indeed guarantees such a right. At the same time, however, the Court recognized that the U.S. Supreme Court may soon resolve the issue in NLRB v. Murphy Oil USA, Inc.

In Convergys Corp., v. NLRB, the Fifth Circuit asked whether “Section 7’s guarantee of the right ‘to engage in other concerted activities for the purpose of . . . other mutual aid or protection’ contemplates a right to participate in class or collective action.” The issue arose from a Board decision holding that Convergys violated the Act by requiring job applicants to sign a class action waiver. Notably, the NLRB’s decision disregarded the Fifth Circuit’s prior decisions in D. R. Horton, Inc. v. NLRB and Murphy Oil USA, Inc. v. NLRB, in which the Fifth Circuit held that Section 7 does not guarantee a right to class or collective action litigation.

Nevertheless, in the Convergys case, the Court reaffirmed that “abrogation of the asserted right to participate in class and collective actions was not abrogation of a Section 7 right and therefore does not constitute an unfair labor practice.” The fact that the Convergys waiver was part of an employment application, and not part of an arbitration agreement had no bearing on the Court’s decision. Rather, the deciding factor was that class action procedures do not constitute substantive rights. Substantive rights cannot be waived, whereas procedural rights, such as class action procedures, can be waived.

In Logisticare Solutions, Inc. v. NLRB, decided by the Fifth Circuit two days later, the Court likewise held that the right to participate in class or collective action litigation is not a substantive right under Section 7, and can thus be waived. Moreover, because the Logisticare waiver could not be reasonably construed to restrict the right to file unfair labor charges, the Court held that requiring employees to sign such a waiver does not violate the NLRA. That is, a reasonable employee would not construe the waiver to prohibit Section 7 activity.

In the end, as noted in the Fifth Circuit opinions, the U.S. Supreme Court may ultimately resolve this battle between the NLRB and a majority of federal circuit courts of appeal.