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Murphy Oil: Use of Employee Arbitration Agreements Affirmed By U.S. Supreme Court

an arbitration agreement form on a desk

National Labor Relations Board v. Murphy Oil USA, Inc.

In a welcome decision for California employers, the U.S. Supreme Court ruled in National Labor Relations Board v. Murphy Oil USA, Inc., by a vote of 5-4, that employers can still require employees to arbitrate their disputes individually, and to waive the right to litigate those disputes through the Court process.

The SCOTUS decision made on May 21, 2018 wrapped up three cases dealing with essentially the same question regarding the validity of arbitration agreements in light of increasing legal activity pertaining to both labor rights (under the NLRA) and class action actions that employers are facing.

In the case of Murphy Oil, SCOTUS held that an employee, who had signed an employment agreement that contained an arbitration provision filed a class action lawsuit in federal court, must proceed to individual arbitrations under the Federal Arbitration Act.

What Does the NLRB v. Murphy Oil USA, Inc. Decision Mean for California Employers

It should be no surprise that California is one of three states where mandatory arbitration agreements are most prevalent. According to a study released by the Economic Policy Institute, more than 67 percent of private-sector workplaces in California are covered by mandatory arbitration agreements.

Recent cases, such as the Dynamex case, explain why employers in California should really consider implementing arbitration agreements as part of their employment practices.

In fact, I recommend that employers in California ensure that their employees sign arbitration agreements at the earliest point possible. Arbitration agreements are subject to attack if they are unreasonable or unconscionable in any way, which is why all companies and employers should hire an attorney’s to draft an agreement that is both fair and clear to the employee.

For instance, in the case of Murphy Oil, the arbitration agreement required the employer to foot the bill for the arbitration under the American Arbitration Association rules. Although such arbitration fees can be costly, most clients find that the amount of money expended in litigation in state and federal court are significantly higher in comparison to the fees/costs associated with private arbitration.

Secure Legal Counsel in Drafting Your Company’s Arbitration Agreement

Take measures to protect yourself, your livelihood, and the company you’ve built by ensuring your arbitration agreement will keep you from having to absorb the cost of expensive litigation in the event of an employee dispute. At JRG Attorneys at Law, we have the knowledge and experience necessary to help you get all your legal ducks in a row and protect yourself while still being fair to your employees. In addition to helping you draft an arbitration agreement, we are prepared to work with you in a variety of other legal matters, including those that fall under:

  • Employment Law: Wage and hour disputes, discrimination, contract disputes, wrongful termination, etc.
  • Business Law: Business formation, dissolution, reorganization, mergers, etc. for a variety of industries including retail, agriculture, planned communities, and more
  • Civil Litigation: Insurance disputes, construction defects, environmental litigation, and more

For an evaluation of your company’s arbitration agreement policy or any employment-related matter, please feel free to contact our Lead Attorney Sergio H. Parra by emailing him at

You can also call (831) 228-5619 or contact us online to schedule your free consultation with a member of our seasoned legal team.