Second Circuit: A Union Cannot Retroactively Bind Former Bargaining-Unit Members to Mandatory Arbitration of Accrued Statutory Wage Claims by a Later MOA Without Consent; Courts Decide Arbitrability Absent Clear Delegation

Case: 1199 SEIU United Healthcare Workers East v. PSC Community Services (consolidated appeals)
Court: United States Court of Appeals for the Second Circuit
Date: July 10, 2026

1. Introduction

This decision arises from a large-scale, union-led wage-and-hour arbitration brought in 2019 by 1199 SEIU United Healthcare Workers East (the “Union”) against more than 40 home health care employers (the “Employers”), seeking statutory damages for alleged wage violations dating back as far as 2008. The arbitration depended principally on a December 2015 Memorandum of Agreement (the “2015 MOA”) that amended earlier collective bargaining agreements (“CBAs”) to require “exclusive” grievance-and-arbitration procedures for claims under the FLSA and New York wage statutes.

A subset of workers—the Pre-2015 MOA Employees—had stopped working (and thus left the bargaining unit/Union membership) before the 2015 MOA took effect. Several such former employees had already filed (or were putative class members in) state-court wage suits, and New York courts had repeatedly held that the Union could not retroactively bind them to MOA arbitration of their accrued statutory claims.

After the Arbitrator issued (1) a “jurisdiction/arbitrability” award (2021) and (2) a merits/remedy award (2022) establishing a ~$30 million Special Wage Fund with rapid payouts, the Union obtained unopposed federal confirmation in the Southern District of New York. The former employees attempted to intervene and object, arguing the awards could not bind them. The district court denied intervention and confirmed the awards largely in full.

The Second Circuit addressed two central issues: (i) whether these former employees had standing and a right to intervene in the federal confirmation proceedings; and (ii) whether the Union and Employers lawfully and clearly agreed to arbitrate—and to delegate arbitrability decisions to the arbitrator—for statutory wage claims of workers who were no longer in the bargaining unit when the 2015 MOA was executed.

2. Summary of the Opinion

The Second Circuit vacated in part and remanded, holding:

  • Intervention/standing: The former employees had Article III standing and were entitled to intervene as of right under Rule 24(a) because confirmation impaired their legally protectable interest in pursuing statutory wage claims in court.
  • “Who decides” arbitrability: It was for the district court, not the arbitrator, to decide whether the parties clearly and unmistakably delegated arbitrability of these statutory claims; there was no such clear delegation here.
  • Arbitrability as to former employees: The Union and Employers did not agree to mandatory arbitration of statutory wage claims until the 2015 MOA, and the Union could not bind workers who had already left the bargaining unit absent a manifestation of consent (express or implied).
  • Confirmation error: The district court erred by confirming the awards insofar as they purported to bind these former employees (the “Named Appellants”).

Practically, the court left the arbitration awards intact for current/covered bargaining-unit members and for those who consented or accepted fund payments, but freed the Named Appellants (and potentially putative class members, subject to state-court determinations) to proceed with statutory wage litigation in state court.

3. Analysis

3.1 Precedents Cited

The opinion is notable for weaving together: (i) Supreme Court “who decides arbitrability” doctrine; (ii) Second Circuit delegation and statutory-rights waiver standards; (iii) labor-law limits on a union’s representational authority over nonmembers/former members; and (iv) Rule 24 intervention doctrine. Key cited authorities and their influence include:

A. Standing and Intervention

  • Ass'n of Contracting Plumbers. v. Loc. Union No. 2 United Ass'n of Journeymen & Apprentices: supplies the governing principle that nonparties may have standing to intervene in confirmation proceedings when they have a “sufficient stake” and the judgment concretely affects their rights. The Second Circuit uses it to reject the district court’s categorical exclusion of employees as “nonparties to the arbitration.”
  • Katir v. Columbia Univ.: the district court read Katir as broadly denying employee standing absent a duty-of-fair-representation claim. The Second Circuit distinguishes it: Katir involved a current bargaining-unit relationship and a CBA-based discharge dispute, not former employees asserting independent statutory claims after leaving the bargaining unit before the arbitration mandate existed.
  • U.S. v. City of New York, Zervos v. Verizon N.Y., Inc.: frame abuse-of-discretion review for intervention denials and clarify that legal error is an abuse of discretion.
  • Brennan v. N.Y.C. Bd. of Educ., Floyd v. City of New York, U.S. v. Pitney Bowes: articulate the Rule 24(a)(2) requirements (“direct, substantial, and legally protectable” interest; impairment; inadequate representation), which the court applies to find intervention mandatory.
  • NML Capital, Ltd. v. Republic of Argentina: supports a related standing concept (nonparty interest “plausibly affected” by judgment), reinforcing that confirmation orders can supply the concrete injury needed for standing.

B. “Who decides” arbitrability (delegation)

  • First Options of Chicago, Inc. v. Kaplan: provides the controlling presumption that courts decide arbitrability unless there is “clear and unmistakable” evidence of delegation; “silence or ambiguity” means no delegation.
  • Granite Rock Co. v. Int'l Bhd. of Teamsters: anchors the proposition that whether parties agreed to arbitrate a particular dispute is typically for judicial determination and must be grounded in contract.
  • Nicosia v. Amazon.com, Inc.: restates the Second Circuit rule that arbitrability is for courts absent clear and unmistakable delegation.
  • DDK Hotels, LLC v. Williams-Sonoma, Inc.: is pivotal to the court’s reasoning that incorporating arbitral rules (like AAA rules) can be relevant but is not dispositive—“context matters.” The Second Circuit applies DDK Hotels to hold that the 2012 CBA’s AAA incorporation does not clearly delegate arbitrability of statutory wage claims where the arbitration clause is limited to CBA “grievances.”
  • Schneider v. Kingdom of Thailand: supports the entitlement to independent judicial review of arbitrability when delegation is absent.
  • Katz v. Feinberg: supplies the “two sets of rules create ambiguity” principle: where procedural frameworks conflict, ambiguity defeats delegation and pushes arbitrability back to courts.

C. Waiver of a judicial forum for statutory claims

  • Wright v. Universal Mar. Serv. Corp.: grounds the idea that surrendering a judicial forum for statutory rights requires a clear waiver; the forum choice is a legally consequential right, not a mere “preference.”
  • Abdullayeva v. Attending Homecare Servs. LLC: reinforces the “clear and unmistakable” requirement in the union waiver context and highlights the exception to ordinary pro-arbitration scope presumptions for statutory claims.
  • Lawrence v. Sol G. Atlas Realty Co.: provides the rule that a CBA arbitration clause covers statutory claims only with “specific references” to the statutes or statutory causes of action, used to reject the argument that the 2012 CBA already swept in wage statutes.

D. Labor-law limits on a union’s authority over former members

  • Green v. Dep't of Educ. of City of New York and Schneider Moving & Storage Co. v. Robbins: establish that a union’s duty of fair representation traditionally runs only to members of its bargaining unit—critical to distinguishing Katir and to explaining why former employees can seek independent judicial relief.
  • Pattern Makers' League of N. Am., AFL-CIO v. NLRB: invoked to emphasize “voluntary unionism” and the significance of membership/bargaining-unit status for representational authority.
  • Allied Chem. & Alkali Workers of Am., Local Union No. 1 v. Pittsburgh Plate Glass Co.: supplies the baseline that a union has no statutory duty to represent non-bargaining-unit persons (e.g., retirees), while leaving room for consensual representation.
  • Republic Steel Corp. v. Maddox and Local 174, Teamsters, Chauffeurs, Warehousemen & Helpers of Am. v. Lucas Flour Co.: cited for federal labor policy concerns about disrupting collective bargaining and administration of agreements; the Second Circuit acknowledges these concerns but rejects the district court’s “opt-out” fear as inapplicable to these facts.
  • Meza v. Gen. Battery Corp., Merk v. Jewel Cos., Cleveland Elec. Illuminating Co. v. Util. Workers Union of Am.: persuasive sister-circuit authority supporting a consent-based approach: a union may represent former members only with evidence of express or implied authorization, especially where arbitration could extinguish their ability to sue.

E. Deference to labor arbitration and “exceeded powers”

  • A&A Maint. Enter., Inc. v. Ramnarain and Gateway Coal Co. v. United Mine Workers of Am.: reinforce the general highly deferential standard for labor arbitration review, which the court then cabins by emphasizing the “exceeded powers” exception.
  • Porzig v. Dresdner, Kleinwort, Benson, N. Am. LLC and Local 1199, Drug, Hosp. & Health Care Emps. Union, v. Brooks Drug Co.: used to underline that arbitration is contractual and an arbitrator’s authority derives solely from agreement.
  • Smarter Tools Inc. v. Chongqing SENCI Imp. & Exp. Trade Co. and Local Union No. 38, Sheet Metal Workers' Int'l Ass'n v. Custom Air Sys., Inc.: support partial vacatur where arbitrators determine rights of nonparties or exceed the scope of their authority.
  • Local Union 97, Int'l Bhd. of Elec. Workers v. Niagara Mohawk Power Corp.: used to clarify post-Granite Rock limits on presumptions of arbitrability and to reject reliance on older “presumption” language.
  • Chan v. Chinese-American Planning Council Home Attendant Program, Inc. and Smith/Enron Cogeneration Ltd. P'ship, Inc. v. Smith Cogeneration Int'l, Inc.: discussed as the foundation for the arbitrator’s “retroactivity” reasoning, but ultimately treated as inapposite (and partially undermined after Granite Rock) because the key issue is not retroactivity between contracting parties, but authority to bind nonmembers/former members without consent.

F. Interaction with New York decisions on the same MOA

  • Konstantynovska v. Caring Pros., Inc., Lorentti-Herrera v. All. for Health, Inc., Hichez v. United Jewish Council of the E. Side, Teshabaeva v. Family Home Care Servs. of Brooklyn & Queens, Inc., Pustilnik v. Premier Home Health Care Servs., Inc.: are treated as consistent, uniform intermediate appellate authority rejecting mandatory arbitration for Pre-2015 MOA Employees. The Second Circuit’s opinion both aligns with and bolsters these rulings, while also making clear that federal “who decides” and union-authority principles independently require the same result.
  • Agarunova v. Stella Orton Home Care Agency, Inc. and Agarunova v. Stella Orton Health Care Agency, Inc.: noted as consistent (including a Second Circuit summary order), but not resolving the delegation issue because waiver was found there.
  • Pentech Int'l, Inc. v. Wall Street Clearing Co.: supplies the principle that federal courts generally follow state intermediate appellate authority absent a contrary ruling from the state’s highest court, reinforcing deference to the New York Appellate Division’s consistent approach.

3.2 Legal Reasoning

A. The decision’s architecture: three levels of inquiry

Following First Options of Chicago, Inc. v. Kaplan, the Second Circuit structures the analysis into:

  • Merits: did employers violate wage statutes and what is owed?
  • Arbitrability: did the relevant parties agree to arbitrate those statutory claims?
  • “Who decides”: did they agree that the arbitrator decides arbitrability?

The court emphasizes that failure at the outer level (no clear delegation) requires courts to decide arbitrability independently, and failure at arbitrability (no valid agreement binding former employees) means the arbitrator exceeded authority as to them.

B. No “clear and unmistakable” delegation of arbitrability

The district court had accepted a delegation theory based on (i) AAA Rules incorporated in the 2012 CBA and (ii) the 2015 MOA’s creation of a statutory ADR regime. The Second Circuit rejects both as to statutory wage claims of former employees:

  • 2012 CBA is “grievance” limited: its arbitration clause is confined to disputes about “specific written provisions” of the CBA. Under Lawrence v. Sol G. Atlas Realty Co., that does not clearly encompass statutory wage claims. Hence, AAA Rules (including AAA Rule 3(a) jurisdiction/arbitrability power) are irrelevant to the statutory wage claims at issue because those claims were not within the CBA’s arbitrable “grievances” to begin with.
  • 2015 MOA is silent/ambiguous on “who decides”: it mandates arbitration for covered statutes but does not clearly allocate the delegation question. Under First Options of Chicago, Inc. v. Kaplan and DDK Hotels, LLC v. Williams-Sonoma, Inc., silence or ambiguity sends arbitrability to courts.
  • Procedural mismatch and exclusivity: the MOA’s detailed, standalone ADR procedures (including mandatory mediation and strict timelines) undercut any argument that it simply incorporates the 2012 CBA’s AAA framework; if both applied, their coexistence would create ambiguity under Katz v. Feinberg, again defeating delegation.

C. The Union could not bind former bargaining-unit members without consent

After concluding courts must decide arbitrability, the Second Circuit holds that the 2015 MOA could not waive the Named Appellants’ right to a judicial forum for accrued statutory claims because:

  • Representational authority is coextensive with bargaining-unit status: relying on Schneider Moving & Storage Co. v. Robbins, Green v. Dep't of Educ. of City of New York, and Allied Chem. & Alkali Workers of Am., Local Union No. 1 v. Pittsburgh Plate Glass Co., the court treats the Union’s statutory authority/duty as generally running to current bargaining-unit members, not those who have left.
  • Consent is required: consistent with Meza v. Gen. Battery Corp., Merk v. Jewel Cos., and Cleveland Elec. Illuminating Co. v. Util. Workers Union of Am., a union may represent former members only with evidence of express or implied authorization. Here there was no showing the Named Appellants consented to having the Union waive their forum rights in 2015 for claims they had already accrued.
  • Statutory rights and forum selection are legally protected: under Wright v. Universal Mar. Serv. Corp. and Abdullayeva v. Attending Homecare Servs. LLC, waiver of a judicial forum for statutory claims requires clarity and lawful authority—conditions absent for former employees not represented at the time of waiver.

D. Why the district court’s policy concern did not carry the day

The district court worried that allowing former workers to escape arbitration would let employees “opt out” by quitting union membership before filing suit. The Second Circuit responds that this is the wrong factual and legal frame: the Named Appellants’ statutory wage claims were not covered by the 2012 CBA’s grievance arbitration at the time they accrued, and the arbitration mandate arrived only later in the 2015 MOA—after they had left. Thus, the case is not about opportunistic avoidance of an existing arbitration duty (as in Katir v. Columbia Univ.), but about whether a later agreement can retroactively extinguish judicial recourse for nonmembers without consent.

E. Consequence: arbitrator exceeded authority as to former employees

Because the Named Appellants were not bound to arbitrate, the arbitrator’s awards—confirmed in federal court—impermissibly purported to determine or preclude their rights. That fits within the “exceeded powers” exception to deference (importing FAA concepts into LMRA review), and supports partial vacatur under Smarter Tools Inc. v. Chongqing SENCI Imp. & Exp. Trade Co. and Local Union No. 38, Sheet Metal Workers' Int'l Ass'n v. Custom Air Sys., Inc..

3.3 Impact

The opinion has immediate and longer-term implications for labor arbitration, class wage claims, and the boundary between union-negotiated ADR and individual statutory rights:

  • Clear constraint on retroactive union waivers for former employees: unions and employers cannot assume that a new MOA/CBA addendum requiring arbitration can sweep in former employees’ already-accrued statutory claims absent a demonstrable consent mechanism.
  • Delegation clarity is essential: incorporating arbitral rules may not delegate arbitrability where the arbitration clause is grievance-limited or the statutory ADR article stands apart; careful drafting is required if delegation is desired.
  • Expanded access to intervention in confirmation proceedings: confirmation orders that purport to bind nonparties can create a “sufficient stake,” enabling intervention even where the underlying arbitration was between union and employer only.
  • State-court wage class actions remain viable for pre-MOA leavers: the decision is likely to embolden and accelerate stayed New York cases involving home care wage claims by Pre-2015 MOA Employees, while leaving state courts to resolve individualized issues (limitations, consent by payout, class certification).
  • Fundamentally, a “scope-of-authority” check on mass class arbitration: even where an industry-wide remedy fund is created and rapidly distributed, confirmation cannot bootstrap arbitral authority over workers who were not represented when the arbitration obligation was created.

4. Complex Concepts Simplified

  • Arbitrability vs. the merits: “Merits” asks who wins (were wages underpaid?). “Arbitrability” asks whether that dispute must be decided by an arbitrator or can be heard in court.
  • “Who decides” arbitrability (delegation): even before deciding arbitrability, courts ask whether the parties clearly agreed to let an arbitrator decide that gateway question. If not, courts decide it.
  • “Clear and unmistakable” waiver/delegation: because statutory rights and court access are significant, generalized arbitration language (or silence) often is not enough; the agreement must be explicit.
  • Bargaining unit and union authority: a union’s legal power to act as “exclusive representative” generally tracks current bargaining-unit membership. Once a worker leaves covered employment, the union cannot typically waive that worker’s litigation rights without consent.
  • Intervention as of right (Rule 24(a)): someone not originally a party can join a case if the outcome threatens a legally protectable interest and existing parties won’t adequately represent that interest—here, the interest in pursuing wage claims in court rather than being bound by arbitration confirmation.
  • “Exceeded powers”: courts are highly deferential to labor arbitration, but not when the arbitrator decides issues or binds people outside the authority granted by contract.

5. Conclusion

The Second Circuit’s central contribution is a paired rule: (1) courts—not arbitrators—decide arbitrability unless delegation is “clear and unmistakable,” and (2) a union and employer cannot retroactively impose mandatory arbitration of accrued statutory wage claims on workers who had already left the bargaining unit when the arbitration obligation was created, absent evidence of consent.

By vacating confirmation as to the Named Appellants and recognizing their right to intervene, the court reinforces that labor arbitration’s breadth is ultimately contractual and representational—powerful, but not unlimited—particularly when statutory wage rights and access to a judicial forum are at stake.