Patterson v. Raymours Furniture Co., Inc.—Enforceability of Class-Action and Collective-Action Waivers in Employment Arbitration Agreements: Second Circuit Reaffirms That Individual Arbitration Clauses Do Not Violate Federal Labor Law

Sullivan & Cromwell LLP - September 7, 2016

In Patterson v. Raymours Furniture Co., Inc., No. 15-2820-cv, the Second Circuit held that employment arbitration agreements containing a waiver of the right to bring class-action or collective-action claims are enforceable and do not violate federal labor law.  In a summary order, the court of appeals held that it was bound by a 2013 Second Circuit decision rendered by a different panel that found such waivers can be enforced.  The Second Circuit’s reaffirmation of that decision aligns it with decisions of the Fifth and Eighth Circuits, whereas recent decisions of the Seventh and Ninth Circuits have adopted the position of the National Labor Relations Board (“Board”) that such waivers are unenforceable.  This decision means that employers in the Second Circuit likely need not be concerned that the Board will charge them with unfair labor practices for maintaining employment arbitration agreements containing class or collective waivers; however, the Board has continued to press its attacks on such agreements in circuits in which its theories have not been rejected, and the Second Circuit’s decision may make it even more likely that the United States Supreme Court will review the question at some point.