Brooklyn Journal of Corporate, Financial & Commercial Law


Recently, federal circuit courts have presented contrasting outcomes regarding the legality of mandatory class action waivers in arbitration agreements. More specifically, these outcomes vary on whether such waivers violate the Fair Labor Standards Act (FLSA) and the National Labor Relations Act (NLRA), and importantly, whether it is possible for these statutes to coexist with the Federal Arbitration Act (FAA). The Second, Fifth, and Eighth Circuits have previously held that the act of an employer requiring employees to sign class action waivers in arbitration agreements posed no violation to either the FLSA or the NLRA. However, in May 2016, the Seventh Circuit created a circuit split, finding that the waivers in these agreements did in fact violate both statutes. This Note argues that the Seventh Circuit’s analysis is correct, and focuses on how the other circuits failed to give proper deference to the FAA. Further, this Note suggests that Congress enact a statute requiring the creation of internal dispute departments within all companies, or alternatively, to amend the FAA to properly address and protect the rights of employees in these circumstances.