The Federal Arbitration Act anticipates California law, which disapproves of the application of a class action lawsuit in labor agreements, ruled the California Supreme Court and made its previous decision to the contrary in Gentry v. Superior Court, 42 Cal. 4th 443 (2007). Iskanian v. CLS Transp. Los Angeles, LLC, No. S204032 (Cal. June 23, 2014). A possible exception could be the establishment of agreements to arbitrate rights that discriminate, harass and/or retaliate in the workplace. In 2019, New Jersey State Legislators amended New Jersey`s anti-discrimination law to prevent the enforcement of agreements to arbitrate such claims and prohibit retaliation against employees who refuse to accept arbitration. New Jersey employers should carefully consider the impact of this change when developing their arbitration agreements, especially when the FAA is not applicable, given that, in such cases, they will not be able to use the argument that it should be anticipated by the FAA on the grounds that it discriminates against arbitration agreements. In both cases, the question arose as to whether the parties` arbitration agreements could be enforced under the NJAA if they were exempted from FAA coverage.
Section 1 of the FAA provides in a relevant part: “[The FAA] does not apply to contracts of employment of seafarers, railroad employees, or other workers working in foreign or intergovernmental commerce.” In Circuit City Stores, Inc. Adams, the U.S. Supreme Court, has interpreted this provision — often referred to as the “FAA Section 1 Exemption” or “Transportation Worker Exemption” — to apply only to transportation workers` employment contracts, not to employment contracts in general. Consequently, for the exception referred to in Section 1 to apply, it is necessary to find that the applicants are transport workers operating in intergovernmental trade. Iskanian also argued that even if the FAA anticipated Gentry, the class action waiver under the NRA was not valid. The Tribunal also rejected this argument and approved the analysis of the U.S. Court of Appeals for the Fifth Circuit in D.R. Horton, Inc. v.
NLRB, 737 F.3d 344 (5th Cir. 2013). Given Concepcion, the NLRB rule was not neutral in arbitration and was not covered by the FAA`s savings clause. Despite the lack of clarity in some areas of the board`s decision, it is undeniable that Cordúa is a complement to an employer`s litigation toolbox that provides legal aid to limit or reduce an employer`s financial risk in class and wage actions. Of course, the use of these class and class actions in arbitration agreements is not without restrictions. For example, employers should always pay attention to applicable contractual defenses, such as fraud, coercion or scruples, that may call into question the validity of these agreements. In addition, epic and Cordúa, at least in the context of collective measures, will most likely not disrupt existing legislation, namely that the existence of arbitration agreements with waiver of class actions will not void the first stage of conditional certification under the FLSA, since it perceives a performance-based provision. . . .