WASHINGTON (Legal Newsline) - The U.S. Supreme Court has scheduled arguments on the validity of class action waiver clauses in employer/employee arbitration agreements for October.

Last month, the nation’s high court set oral arguments in the three consolidated cases, Epic Systems Corp. v. Lewis, Ernst & Young v. Morris and NLRB v. Murphy Oil USA Inc., for Oct. 2.

The high court granted petitions for writ of certiorari, or review, in the three cases in January.

The cases have been allotted a total of one hour for argument, according to the court’s January order list.

The October argument date means a decision likely won’t be reached by the Supreme Court until late this year or even early 2018.

The National Labor Relations Board filed its brief just last week.

The Supreme Court, in its upcoming decision, must consider whether the National Labor Relations Act bars enforcement under the Federal Arbitration Act, of class action waiver provisions in an arbitration clause in an employment contract.

The court’s decision in the cases aims to resolve a significant split among federal appellate courts.

The Second, Fifth and Eighth Circuit courts have held that the FAA requires the enforcement of class action waivers in employment arbitration agreements. 

The Seventh and the Ninth circuits have reached the opposite conclusion, holding that such waivers are unenforceable.

In May 2016, the Seventh Circuit ruled against Epic Systems, a Wisconsin-based health-care software company.

Epic required certain groups of employees to agree to bring any wage-and-hour claims against the company only through individual arbitration. The agreement did not permit collective arbitration or collective action in any other forum. 

The Seventh Circuit said in its decision that employers can’t prevent class, or collective, actions through waivers in mandatory arbitration agreements.

In August 2016, the majority of a three-judge panel of the Ninth Circuit vacated a district court’s order compelling individual arbitration in a class action filed against Ernst & Young by its employees.

The Ninth Circuit sided with the approach of the National Labor Relations Board in ruling that individual arbitration waiver agreements are unenforceable under federal law.

The employees, Stephen Morris and Kelly McDaniel, alleged Ernst & Young, one of the “Big Four” audit firms, misclassified employees to deny overtime wages in violation of the Fair Labor Standards Act and California labor laws.

In Murphy Oil, the NLRB had ruled that similar arbitration agreements barring the gas station chain’s workers from pursuing class or collective actions were unlawful. However, the Fifth Circuit reversed the board’s ruling.

The NLRB, an independent agency of the U.S. government, is charged with investigating and remedying unfair labor practices.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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