Society for Human Resource Management

While pundits and practitioners eagerly await the U.S. Supreme Court's looming decision on whether class-action waivers in employment-related agreements violate the National Labor Relations Act (NLRA)—a decision that will not be issued until 2018—one New York state court has decided to wade into the fracas.

Authors: Mark S. Goldstein Cindy Schmitt Minniti

On July 18, a New York state appellate court, whose jurisdiction covers Manhattan and the Bronx, concluded in Gold v. N.Y. Life Insurance Co. that contract clauses barring employees from commencing class, collective and other representative actions against their employers are unenforceable and do indeed violate the NLRA.

In Gold, the appellate court examined the question of whether an employer can force its employees to sign an agreement requiring that all legal claims against the employer be brought only through arbitration and, perhaps more importantly, only on an individual basis and in separate proceedings. After recognizing that "there is a recent split among the federal circuit courts regarding these types of clauses," the court answered this question with a resounding "no."

As a result, employers with operations in Manhattan and the Bronx will need to review their arbitration agreements to ensure compliance with all procedural and substantive fairness requirements—including but not necessarily limited to class waivers.