A new Employment Eligibility Verification (Form I-9) was released on November 14, 2016. Under the Immigration Reform and Control Act of 1986 (IRCA), employers are required to verify the employment eligibility and identity of new employees by reviewing documents provided by the employee (such as passports, visas, licenses, etc.) and completing the Form I-9. This requirement applies to all new employees including U.S. citizens. Although the Form I-9 is currently two pages and may seem simple, it is difficult to comply with all I-9 requirements. Errors are frequently made when completing the form, which may lead to penalties and fines to the employer. The new form is intended to help reduce errors, and allow completion of the form on the USCIS website.

The on-line form now includes drop-down lists and calendars for filling in dates, on-screen instructions for each field, easy access to the full instructions, and an option to clear the form and start over. This should not be confused with the electronic I-9 used in the E-verify system.

Other changes include prompts to ensure information is entered correctly, the ability to enter multiple preparers and translators, a dedicated area for including additional information rather than having to add it in the margins, and a supplemental page for the preparer/translator.

The instructions have also been separated from the form, and include specific instructions for completing each field.

Although employers may continue to use either the old version (dated 3/8/2013) or the new version, they will be obligated to use the new version as of January 22, 2017.

Late in the afternoon on November 22, Judge Amos Mazzant of the U.S. District Court in Sherman, Texas issued an order granting an injunction which will at least delay and possibly derail the changes to the overtime rules under the Fair Labor Standards Act (FLSA), which are scheduled to go into effect on December 1.

Twenty-one states filed an emergency motion for a preliminary injunction in October to halt the rule. They claimed that the DOL exceeded its authority by raising the salary threshold too high and by providing for automatic adjustments to the threshold every three years.

The states’ case was consolidated last month with another lawsuit filed by the U.S. Chamber of Commerce and other business groups, which raised similar objections to the rule.

The court found, on a preliminary basis, that Congress intended for the classification of executive, administrative, and professional employees under the FLSA to be determined with regard to duties, and not solely based on a minimum salary level test. The court found that the new overtime rule, with its increase in the salary level test to $913 per week, will render millions of employees ineligible for the EAP exemption without regard to their job duties, in violation of Congress’s intent. The court likewise took issue with the new rule’s automatic triennial increase to the salary level test.

The court referred to the injunction as a means of maintaining the status quo while it took sufficient time to make a final determination on the issue of whether the USDOL had the authority to promulgate the rule as well as whether the rule is valid. Unfortunately, many businesses have already implemented the changes which would have been required for compliance.

Employers are undoubtedly asking what they should do now and what happens next. Some suggestions:

  • If you procrastinated and have not made the changes or informed employees of your intended changes, do nothing for now. Time will tell whether the rule will remain, be modified or revert to the current rule.
  • If you have made the changes or have notified employees of new classifications or new pay rates, stay the course. Taking away pay increases now will not only affect employee morale, it could lead to wage and hour complaints, especially if part of the reason for reclassification was that the employees did not meet the duties tests which were NOT changed by the new regulation.
  • If during this process, you have discovered that you have misclassified employees based on the duties test, make the changes anyway. If employees should be non-exempt based on their duties, now is the best time to make it right.

As far as what the future holds, it is hard to say. The court could make a decision between now and December 1 or it might delay even longer. Once that decision is made, the issue could end up before the US Supreme Court, which still has only eight members. If nothing is done between now and January 20, the new administration could decide not to defend the rule promulgated by the DOL, an arm of the federal government.

If employers find themselves in a quandary our FLSA Task Force is available to assist. Contact us at FLSA@mclane.com.

On Wednesday, November 16, 2016, the U.S. District Court for the Northern District of Texas issued a permanent nationwide injunction striking down the DOL’s efforts to vastly expand the type of “persuader” activities subject to public reporting under the Labor-Management Reporting and Disclosure Act (LMRDA).  See Nat’l Fed’n of Independent Bus. v. Perez, No. 5:16-cv-066 (N.D. Tex. Nov. 16, 2016).  While the court’s decision was not unexpected in light of the preliminary injunction it already granted against the DOL’s highly controversial persuader rule, it nevertheless represents a significant victory for employers who rely on attorneys and consultants for advice in the face of union organizing campaigns.

Along with requiring employers to file public reports on payments made to unions and union officers, Section 203 of the LMRDA, 29 U.S.C. § 433, requires employers and consultants (including lawyers) to file reports on agreements or arrangements to perform activities with an object to persuade employees to exercise (or not exercise) their right to organize and bargain collectively, or to supply employers with information about employees’ activities in connection with a labor dispute.

Engaging in the above “persuader” activities triggers significant obligations under the LMRDA.  Not only are both the consultant and the employer required to file reports on the persuader services, but the consultant is additionally required to report on all “labor relations advice or services” that the consultant performed for any employers during that same year—regardless of the purpose of the advice or services.  These reports are public information and available online at the Department of Labor’s Office of Labor-Management Standards website.  Violations of the LRMDA’s reporting obligations is punishable by criminal penalties, including fines up to $10,000 and imprisonment.

Section 203(c) of the LMRDA, however, contains an important exemption to these reporting obligations.  Under the “advice exemption,” no reporting obligation is triggered when a consultant (such as an attorney) merely provides “advice” or materials to an employer that employer is free to accept or reject and when the consultant has no direct contact with the employer’s non-management employees.  Typical examples of historically exempt “advice” have included the preparation of documents and speeches for employers to use during an organizing campaign, the development of personnel policies, and the training of managers and supervisors, among others.

Had the DOL’s new interpretation of the “advice” exemption gone into effect, the above definition of exempt “advice” would have been significantly narrowed.  Under the DOL’s new persuader rule, certain advisory activities would have been reportable if they had a direct or indirect object to affect an employee’s decisions regarding representation or bargaining rights—even if the consultant (such as an attorney) had no direct contact with employees.   Consultants (including attorneys) who drafted speeches or written materials for the employer to present to employees, conducted seminars for supervisors, planned employee group meetings, or developed personnel policies (such as employee handbooks) would have engaged in reportable persuader activity under the DOL’s new rule if they did so with an object to persuade employees regarding representation or bargaining rights—subjecting them to the broad reporting obligations (and criminal penalties for failing to comply) described above.

The new interpretation of the “advice” exemption was set to apply to all arrangements and payments made on or after July 1, 2016.  On June 27, 2016, however, the Northern District of Texas issued a nationwide preliminary injunction against the new rule.  The court held that the plaintiffs were likely to succeed in showing that the DOL’s revised interpretation of the “advice” exemption contradicted the LMRDA’s plain language, was arbitrary and capricious, was unconstitutionally vague, imposed an undue burden on employers’ First Amendment right to hire and consult an attorney, and violated the Regulatory Flexibility Act.  The DOL appealed the order (see Nat’l Fed’n of Indep. Bus., et al. v. Perez, et al., No. 16-11315 (5th Cir. Aug. 29, 2016)), arguing that its new interpretation of the “advice” exemption was a permissible exercise of its regulatory authority and consistent with the First Amendment, and that nationwide relief was inappropriate in light of other similar suits pending in Minnesota and Arkansas.

The court’s November 16, 2016 order issuing a permanent, nationwide injunction against the rule offered no additional analysis, instead referring to the parties’ briefing and its previous preliminary injunction order.  While the DOL’s appeal of the preliminary injunction will likely become moot once the district court enters its final judgment in the case, it remains to be seen whether the Department of Labor will appeal the permanent injunction.

Megyn Kelly
Photo: Robert Deutsch, USA TODAY

Words spoken yesterday morning by Fox News personality Megyn Kelly during an interview by George Stephanopoulos on Good Morning America.  Kelly was asked about the lawsuit filed by her former Fox News colleague Gretchen Carlson against former CEO Roger Ailes and Kelly’s own experiences with Ailes a decade ago.  According to Kelly, and as described in her new book, Ailes sexually harassed her and tried to entice her to engage in a sexual relationship.  She rebuffed his advances, called a lawyer and notified her immediate supervisor.  The supervisor vouched for Ailes and told Kelly the behavior was out of character and also advised Kelly to “ignore him.”  Kelly did just that, something relatively easy for her to do since she was assigned to the network’s Washington office and Ailes was in New York.  After about six months of being ignored, Ailes moved on, and he and Kelly had a cordial and mutually beneficial professional relationship until he left the network.

When pressed as to whether she regretted not having come out publicly about his advances ten years ago, Kelly told a story remarkably similar to that which women in workplaces tell every day.  First, she wasn’t sure that this wasn’t an isolated incident, especially given her supervisor’s statements and advice, which seemed to work.  Second, in her eyes, she had no one to go to.  She had barely a year’s tenure at the station, and Ailes, the CEO, was one of the world’s most powerful men.  She had done more than many women in her place might have done, but going above Ailes’ head to the owners or going to the general counsel would have been “a suicide mission” for her career.  She told Stephanopoulos the obvious, “I wasn’t the same Megyn Kelly then as I am now.”

Kelly’s responses are consistent with what many women who are victims of harassment say.  Why didn’t she speak out sooner?  Why didn’t President-Elect Trump’s accusers come forward years ago?  They didn’t know there were others; they didn’t have anyone they could safely tell; they didn’t think they would be believed.

The stories of Carlson, Kelly and countless other female employees at Fox put an exclamation point on the findings of an EEOC task force which spent a year studying the issue of workplace harassment.   They issued a report in June 2016, entitled  Report of the Co-Chairs of the EEOC Select Task Force on the Study of Harassment in the Workplace”  which concluded that sexual harassment remains a significant workplace issue.  Among a great deal of information, the Report provides practical resources, including checklists and a “risk factor” analysis, to help employers assess their organization and respond appropriately to troubling behavior.

Reviewing the risk factor analysis is a necessary first step for employers looking to address this important workplace issue.  The task force focused on what they viewed to be environmental factors, organizational factors or conditions that might increase the likelihood of harassment rather than on the qualities that might lead one to be a likely victim or a likely harasser.  The Report says:

Most if not every workplace will contain at least some of the risk factors we describe below. In that light, to be clear, we note that the existence of risk factors in a workplace does not mean that harassment is occurring in that workplace. Rather, the presence of one or more risk factors suggests that there may be fertile ground for harassment to occur, and that an employer may wish to pay extra attention in these situations, or at the very least be cognizant that certain risk factors may exist. Finally, we stress that the list below is neither exclusive nor exhaustive, but rather a number of factors we felt were readily identifiable.

What follows is a list of some of the risk factors identified.

  • Homogenous Workforces: Sexual harassment  of women is most likely to occur in workplaces with primarily male employees; racial or ethnic harassment is more likely to occur where one race or ethnicity is predominant.
  • Workplaces Where Some Workers Do Not Conform to Workplace Norms: A feminine man in a predominantly male environment where crude language is common; a woman who challenges stereotypes by being “tough.”
  • Cultural and Language Differences: Diverse workplaces where “blocs” of workers from different cultures congregate; workers may not know the cultural norms of the workplace or their rights and be subject to exploitation.
  • Coarsened Social Discourse Outside the Workplace: Events outside the workplace like terrorist attacks and controversial elections may lead to discussions previously deemed unacceptable at work.
  • Workforces with Many Young Workers: Young workers who lack the maturity to understand the consequences of their behavior; unskilled or inexperienced young people who may be taken advantage of.
  • Workplaces with High Value Employees: Where some workers are viewed as highly valuable to the employer due to significant rainmaking or sales ability or particular highly sought after skills, there may be a reluctance to challenge poor behavior combined with a belief of the employee that the rules do not apply to them.
  • Workplaces with Significant Power Disparities: Executives and administrative staff, military or hierarchical organizations, the lack of knowledge of how to report or the fear that reporting may lead to the loss of a job.
  • Workplace Cultures that Tolerate or Encourage Alcohol Consumption: Reduced inhibitions, clients or customers feeling emboldened by alcohol.
  • Workplaces that Rely on Customer Service or Client Satisfaction: Entities where compensation is directly tied to customer service or client satisfaction, a tipped employee or a commissioned salesperson.

Employers should challenge themselves to look at these and the other risk factors set out in the Report to determine whether they are at risk for harassment issues.  They should review not only their policies, but how their policies are implemented and whether employees, including high level management employees, are held accountable for their behavior. Not only will such self-examination reduce the risk of litigation, it is good business with a direct link to recruiting and retaining talented and motivated employees.

Photo Credit: smlp.co.uk via Flickr (CC by 2.0)
Photo Credit: smlp.co.uk via Flickr (CC by 2.0)

In October, the EEOC unveiled its four year Strategic Enforcement Plan (SEP).  The SEP provides employers insight into areas the EEOC plans to focus on in the coming years.  This heads-up plan allows companies to take steps to ensure their businesses are compliant when there is a knock at the door.

The new SEP does not contain any major changes from the EEOC’s prior strategic direction.  Instead, the EEOC will continue its emphasis on many of the priorities that it set forth in the 2012-2016 four year SEP.  Employers should expect continued focus on the EEOC bringing litigation in large-scale, high-profile and high-impact cases.  Employers should also be careful when classifying workers as independent contractors or temporary workers.

For Fiscal Years 2017-2021, the EEOC has identified six priority areas under this new SEP.  Employers should be mindful of this direction and review their internal policies to confirm they are in conformity with the law in the following areas:

  1. Eliminating Barriers in Recruitment and Hiring

The EEOC will prioritize eliminating discrimination related to recruitment and hiring, including employer policies and practices of exclusion, screening that disproportionately impacts workers in protected categories, and placing of individuals into specific jobs inappropriately based upon protected categories.

Employers:  Review your hiring policies to confirm there are no discriminatory practices in your recruitment and hiring processes or procedures.  For example, revisit your employment applications and determine whether any tests or surveys you make employees complete disproportionately impact a protected class or are inaccessible for persons with disabilities.

  1. Protecting Vulnerable Workers, Including Immigrant, and Migrant Workers, and Underserved Communities from Discrimination

The EEOC will prioritize enforcing equality for immigrant and migrant workers and persons perceived to be members of these groups as well as other underserved communities.

Employers:  Identify those vulnerable, immigrant, and migrant workers and underserved communities in particular areas.  Employers should assess whether they have workforce policies and practices that impact these workers or underserved communities.

  1. Addressing Selected Emerging and Developing Issues

The EEOC will focus on the following areas: (a) inflexible leave policies that discriminate against individuals with disabilities; (b) pregnancy-related limitations that violate the Pregnancy Discrimination Act and the Americans with Disabilities Act Amendments Act; (c) the increasing and continued complexity of employment relationships and work-structures, including those relationships involving temporary workers, staffing agencies, independent contractors, and the on-demand economy (for example, Uber drivers); (d) LGBTQ discrimination; (e) discriminatory practices against persons of Arab, Middle Eastern or South Asian descent, those who are Muslim or Sikh, and persons perceived to be members of these groups.

Employers:  Review your leave policies and ensure leave is considered as a reasonable accommodation for employees who are unable to work or to return to work after a leave due to a disability.  Review your policies on providing accommodations for pregnant workers.  Schedule training for all managers/supervisors and employees to educate them about laws protecting employees against discrimination and each person’s obligation to promote and maintain a discrimination and harassment-free workplace.

Determine whether you are properly classifying workers as employees, independent contractors, or temporary/seasonal workers, as the EEOC continues its focus in this area as it has in the past many years.  Importantly, this SEP acknowledges the changing workforce in the 21st Century.  More and more people are working in alternative or contingent workplace arrangements, including the Uber-like on-demand jobs of today.  This SEP will likely involve the EEOC’s closer look and focus on these types of emerging work arrangements, and employers can expect the EEOC to challenge and litigate these high-profile issues in the coming years.

  1. Ensuring Equal Pay Protections for All Workers

The EEOC will renew its focus on safeguarding compensation systems and ensuring such practices do not discriminate against workers based on race, religion, ethnicity, sex, age, disability, or any other protected categories under the law.

Employers: Employers should review their current compensation policies and practices to ensure that all employees are receiving the pay to which they are entitled.  This may include an audit of the company’s compensation structure.  Companies should consider having outside legal counsel perform such an audit as that process may allow for certain privilege protections.

  1. Preserving Access to the Legal System

The EEOC will target employer policies that impede the ability of employees to pursue their workplace rights.  This includes aiming its efforts at overly broad waivers or releases and mandatory arbitration provisions as well as ending practices that deter employees from exercising their legal rights. The EEOC will also focus on ensuring employers maintain the appropriate applicant and employee data and records as required by EEOC regulations.

Employers:  Review the language in your waivers, releases, and arbitration agreements.  Review the language in your handbook policies to ensure they do not stifle employees ability to exercise their legal rights in the workplace.  Confirm your company is properly retaining documents as required under the law.

  1. Preventing Systemic Harassment

The EEOC will renew its heightened focus on ending harassment in the workplace.  Continued attention will be given to workplace policies and practices.  Again, focus will be given to deterrence measures that put a stop to future harassment.  With an expected increase in litigation, this includes the EEOC bringing enforcement actions in court against companies that seek monetary damages and injunctive relief.

Employers:  Review your handbook policies and procedures on appropriate behavior in the workplace and anti-harassment and retaliation policies.  Train managers, supervisors, and employees about expected behavior in the workplace and everyone’s obligation to promote a harassment and discrimination free workplace.

Employer should start preparing for the next four years today.

Donald TrumpWhile inauguration day is still several weeks away, employers are already wondering what is in store for them when Donald Trump takes office as the forty-fifth president. Throughout his campaign, Mr. Trump has set forth a number of promises and proposals that could have significant effects on American employers. It remains to be seen whether any of these proposals will become a reality, but the following are some of the top issues that employers will be watching.

Minimum Wage: On the campaign trial, Mr. Trump has said that he favors increasing the federal minimum wage to $10 per hour (up from the current $7.25), although such a move is not supported by Republicans in Congress. Even if the federal minimum wage increased to $10, it wouldn’t affect Massachusetts employers since the state minimum wage is already $10, and is set to increase to $11 per hour on January 1, 2017.

Overtime: The Department of Labor’s new overtime rule—which raises the FLSA’s minimum salary level for exempt employees to $47,476 per year—goes into effect on December 1, 2016, well before Mr. Trump takes office. However, Mr. Trump has said that he would like to see a “carve out” exempting small businesses from the new overtime rules. Also, lobbyists from the retail industry have indicated that they will try to persuade the Trump administration to eliminate the rule’s automatic triennial salary level adjustment.

Paid Leave for New Mothers: In an initiative spearheaded by his daughter, Ivanka—a working mother herself—Mr. Trump has promised to provide six weeks of paid maternity leave for new mothers. While the specifics have yet to be worked out, the plan calls for providing new mothers with temporary benefits through the unemployment insurance system rather than direct payments from employers. The plan does not appear to make any provision for new fathers, and it is unclear as to whether the proposed benefits will be available in cases of adoption and surrogacy.

Child Care: Mr. Trump has also promised to help workers deal with the high cost of child care. He has proposed an “above-the-line” deduction for child care costs on parents’ tax returns. He has also proposed the creation of tax-exempt dependent care savings accounts, into which parents could deposit up to $2,000 per year. Mr. Trump’s savings account proposal also calls for the government to provide a 50% match on the first $1,000 of contributions for qualifying low-income parents. Finally, Mr. Trump is calling for adding greater incentives, in the form of tax credits, for employers to offer on-site child care.

Healthcare: A centerpiece of Mr. Trump’s campaign has been his pledge to repeal and replace Obamacare. It is not clear, however, what Mr. Trump and the Republican-controlled Congress will replace it with. Some of the more popular aspects of the Affordable Care Act—such as protections for people with pre-existing conditions, and extended coverage for young adults under their parents’ plans—are likely to be retained, according to many pundits. Other changes will be hotly debated, and closely watched by employers, in the coming months.

Photo: Barry Richmond via Flickr (CC by SA 2.0)
Photo: Barry Richmond via Flickr (CC by SA 2.0)

Yesterday, with the approval of Question 4 by a 53.6% to 46.4% vote, Massachusetts joined a growing number of states that have legalized marijuana for recreational purposes. What does this change in the law mean for Massachusetts employers?

The new law, which goes into effect on December 15, 2016, allows Massachusetts residents over the age of 21 to possess up to one ounce of marijuana outside their home and up to ten ounces at home, and to grow a limited number of marijuana plants at home. The law also allows Massachusetts adults to give (but not sell) up to one ounce of marijuana to another adult. The law provides for the establishment of a Cannabis Control Commission to be responsible for regulating and licensing the commercial sale of marijuana, something that won’t begin until at least January 2018. It will still be illegal in Massachusetts to consume marijuana in public, to smoke it anywhere that smoking tobacco is prohibited, or to operate a motor vehicle under the influence of marijuana. The possession and sale of marijuana remains illegal under federal law.

For Massachusetts employers, however, this new statute doesn’t represent a significant change in the law. The text of the statute provides that employers are not required to permit or accommodate any of the conduct allowed by the statute in the workplace, and the law specifically provides that it does not affect employers’ authority to enact and enforce workplace policies restricting the consumption of marijuana by employees.

The use of marijuana for medical purposes is already legal in Massachusetts following a 2012 voter initiative. Many employers took that change in the law as an opportunity to establish or update policies and procedures relating to drugs in the workplace. For employers that don’t already have comprehensive drug and alcohol polices in place, now is a good time to address those issues with employment counsel to ensure that they comply with the law and achieve the employers’ objectives for a drug-free workplace.

Photo: Jason Lawrence via Flickr (CC by 2.0)
Photo: Jason Lawrence via Flickr (CC by 2.0)

Upon a motion for preliminary approval of the class-action settlement for $100 million, a federal court found that the settlement between Uber and drivers in two states was “not fair, adequate and reasonable” and denied approval.  It ordered the parties to confer about how they wanted to proceed.  A joint status report is due on September 8th and a status conference is scheduled with the court for September 15th.

The litigation involves current and former Uber Technologies Inc. drivers in Massachusetts and California who brought claims alleging that they were improperly classified as independent contractors rather than as employees.  The actions cover about 385,000 drivers.  After three years of contentious litigation, and on the eve of trial earlier this year, the parties reached a settlement of these two class-action lawsuits.  Among other terms, Uber agreed to pay $84 million plus an additional $16 million depending if the company went public.  Drivers would remain classified as independent contractors and Uber agreed to institute certain processes and procedures internally.  See my previous post about some of the settlement terms.

In his review of the proposed settlement, Judge Edward Chen of the U.S. District Court for the Northern District of California cited case law noting that “whether a settlement is fundamentally fair…is different from the question whether the settlement is perfect in the estimation of the reviewing court.”  But “when…the settlement takes place before formal class certification, settlement approval requires a ‘higher standard of fairness.'”  As the judge explained, in this case, “because the Settlement Agreement covers the claims of both certified class members and drivers who fall outside the class definition and thus have not been certified (for example, all Massachusetts drivers and the California drivers who drove for a third-party transportation company or under a corporate name), this Court must apply the more ‘exacting’ standard in determining whether this settlement is fair, adequate, and reasonable.”

Of primary concern to the court was that the $1 million allocated to California’s “Private Attorneys General Act” (PAGA) claim was modest.  PAGA is a law that allows private citizens to seek civil penalties for labor violations.  The judge noted that the settled PAGA portion was .1% of the potential $1 billion-plus statutory penalty against Uber claimed in the lawsuit.  “Here, the court cannot find that the PAGA settlement is fair and adequate in view of the purposes and policies of the statute.”  Essentially, the federal court found that the amount of the settlement allocation to the state was not large enough.

The court also ruled that the arbitration provision on appeal deserved further consideration. The appeal pending at the 9th Circuit Court of Appeals on an earlier decision by Judge Chen involves a determination as to whether certain arbitration agreements signed by drivers are enforceable.  Judge Chen recognized that if he were reversed on appeal, it would have a significant impact on the case as many of the drivers would need to proceed through arbitration.

Both sides have reported their disappointment in the ruling.  This ruling by the federal court, however, does not prevent the parties from reaching a new settlement which addresses the judge’s concerns, particularly as to the PAGA.

This case is being watched closely by those companies using on demand workers.  It is also a good reminder about the potential class-action liability employers face for the misclassification of a group of employees.   All employers should be reviewing their independent contractor classifications to make sure those persons are not really employees under an incorrect label.

Ernst & Young, LLP, a global professional services firm, made an effort to stem the tide of challenging and expensive class action litigation by including in their employment agreements a clause by which employees waive their rights to file work-related claims as a collective group.  The contracts require employees to arbitrate claims individually.  Ernst & Young followed the actions of a number of companies large and small which are increasingly requiring employees to sign these waivers.  Not only do such waivers purport to save employers a lot of money which would be used to defend class actions, they may very well dissuade employees from filing individual claims which might be costly and  difficult to pursue on their own, especially if relatively small amounts of money are at issue.

In ruling this week, the 9th Circuit Court of Appeals became the second federal appellate court to bolster the NLRB’s position that such waivers are unenforceable and violate the National Labor Relations Act (the “Act’).  The Act guarantees employees the right to engage in concerted activity which includes filing legal action against an employer as a group.  It is noteworthy that two Circuit Courts have gone the other way, ruling that such waivers are indeed enforceable.  This leads to the conclusion that this issue will end up before the United States Supreme Court for final resolution.

The case before the 9th circuit was brought by two former Ernst & Young employees who alleged on behalf of the purported class that the company failed to pay overtime in accordance with federal and state law.  The court did not rule that arbitration clauses in and of themselves were unenforceable as to individual claims, only that the employees were entitled to pursue a class action on behalf of themselves and other similarly situated employees.

The case is Morris v. Ernst& Young, 9th U.S. Circuit Court of Appeals, No. 12-16599.