Class Action Waiver Clauses in Employment Contracts Are Illegal "Yellow Dog" Contracts.

Employees have little power to resist coerced arbitration agreements.

Courts should not enforce class action waiver clauses in employer-employee arbitration agreements because the clauses will wipe out long-standing and hard fought legal rights of employees. Most of the Federal employment laws allow for employees to join together in collective action lawsuits to advocate for terms and conditions of employment. If courts enforce the agreements, employers will be able to eliminate the ability of employees to act concertedly to challenge employers in court.

Many employers are using class action waivers in arbitration agreements that they make their employees sign to get or to keep their jobs. It seems a bit unfair to slip an arbitration agreement into an employment application or even to force employees to sign away their right to go to court. But the courts have enforced coerced arbitration agreements and point out that the Federal Arbitration Act favors the arbitration of disputes--as long as certain conditions are met, like the employer pays the costs of the arbitration and employees are not forced to give up their substantive legal rights. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991).

Class action waivers should not be in abritration agreements.

A problem that I see is that employers are pushing the line when they require employees to sign a document where the employees must agree not to be a part of a class action lawsuit against the employer. I fight class action waivers as an illegal "yellow dog" contract. Yellow dog contracts were originally used by employers to force their employees to agree not to join a union.

The Norris-LaGuardia Act and the National Labor Relations Act enacted by congress in the 1930's outlawed yellow dog contracts. Employees have the right to join together to advocate for their mutual aid in improving the terms and conditions of their employment. This includes the right to file and participate in a class action lawsuit against the employer and specifically includes the right to file and opt-in to a collective action under the Fair Labor Standards Act. Trinity Trucking & Materials Corp., 221 NLRB 364 (1975), Le Madri Restaurant, 331 NLRB 269 (2000), Novotel New York, 321 NLRB 624 (1996), United Parcel Service, Inc., 252 NLRB 1015, (1980).

Employment contracts that prevent employee concerted action are unlawful.

The Norris-LaGuardia Act says that Federal Courts do not have the jurisdiction to enforce yellow dog contracts.

The problem is that a Federal Court has already enforced an arbitration agreement that prohibited employees from participating in class actions--without even considering the Norris-LaGuardia Act. Carter v. Countrywide Credit Industries, Inc., 362 F.3d 294 (5th Cir. 2004). The Countrywide decision focused on the liberality of the Federal Arbitration Act, but did not discuss whether the court was enforcing a yellow dog contract--without the jurisdiction to do so.

My law firm is prosecuting a collective action lawsuit on behalf of current and former pharmaceutical reps who work for Nephron Pharmaceuticals who were denied overtime pay. Nephron forced most of its drug reps to sign arbitration agreements that contains a clause that says the reps cannot file or participate in class action lawsuits. Nephron has asked the Federal Court in Atlanta to order the case to arbitration. We have asked the court to strike the anti-class action clause from the agreement before sending the case to arbitration.

We advocate for the rights of all employees.

The issue is important to fight because it involves the balance of power between employers and employees. We can handle multiple individual arbitrations against Nephron and adequately protect the rights of all of our clients. The problem is the setback to employee rights. With the ability to eliminate collective actions, employers will have the incentive to not comply with the Fair Labor Standards Act. Fewer employees will be able to challenge the employers and employers will profit from violating the law--even when they lose in arbitration. Employers who do not comply with the law will gain an unfair advantage over companies who do comply with the law. In an era of a decline of organized labor, enforcement and preservation of employee legal rights is essential.