Supreme Court Approves Obtaining Class Action Waivers Through Arbitration Agreements – What Now?

The Supreme Court recently ruled in a 5-4 decision that an employer may require an employee, as a condition of employment, to enter into an arbitration agreement in which the employee agrees to waive the right to bring a class or collective action. This ruling is significant for the restaurant industry in which employers have been subjected to a multitude of class and collective actions, particularly focused on wage and hour issues, such as whether the employer unlawfully took a tip credit against the minimum wage paid to its employees and/or improperly administered a tip pool.

History of Collective Action Waiver Legal DisputeSince 2012, the National Labor Relations Board (NLRB) has held that class and collective action waivers in arbitration agreements violate Section 7 of the National Labor Relations Act (NLRA) (hereinafter “Section 7”). Section 7 guarantees employees the right to engage in “concerted activities for the purpose of collective bargaining or other mutual aid or…