A few weeks ago, we posted about the Fifth Circuit’s decision in the D.R. Horton case and the NLRB’s doctrine of non-acquiescence. As you will recall, in D.R. Horton, the NLRB held that an employer violates the right of employees to engage in concerted activity by maintaining an arbitration program which prohibits employees from pursuing class or collective actions in court or before the arbitrator. The NLRB’s D.R. Horton decision was reversed on the merits by the Fifth Circuit, but under the NLRB’s policy of not acquiescing in adverse court of appeals decisions, the NLRB General Counsel continues to authorize complaints in these so-called “class action waiver” cases.

Now we have an NLRB administrative law judge’s decision that serves not only as an example of the non-acquiescence doctrine, but takes the NLRB’s ruling in D.R. Horton a significant (and not inconsistent) step further. In Leslie’s Pool Mart, Case 21-CA-102332 (January 17, 2014), the General Counsel issued a complaint which required the judge to decide whether the employer’s “mandatory arbitration agreement violates. . . the Act even though the agreement does not expressly prohibit employees from engaging in protected concerted activities.” (Slip op. at 4.)

In a nutshell, here is what had happened: The employer maintained an arbitration program that required its employees to submit employment related claims to arbitration. However, the employer did not include a provision requiring employees to waive class and collective actions. A separated employee filed a class action on behalf of himself and other current employees alleging that the class had been improperly denied certain overtime pay by the employer. The employer moved to dismiss the suit and compel individual arbitration of each claim, pursuant to the employer’s arbitration program.

The General Counsel maintained that even though the employer’s arbitration program was silent on the “class action waiver” issue, the employer violated the law by seeking an order from the court dismissing the class action and compelling individual arbitration of the claims. The administrative law judge rejected a number of procedural and substantive defenses asserted by the employer and agreed with the General Counsel:

Applying Board precedent to this case, I find that Respondent’s arbitration agreement violates the Act. While the arbitration agreement does not, on its face, prohibit collective or class action, it has the effect of doing so as evinced when Respondent, in moving to compel arbitration of his claims, sought to preclude. . . a class action lawsuit and maintained that ‘arbitration is the elected and required forum for resolving [Charging Party’s] individual claims.’

(Slip op. at 7, emphasis in original.)

This case well illustrates that the “class action waiver” issue is not only alive and well at the NLRB, but that it is being extended to apply beyond the employer’s written policy to the employer’s actions taken to enforce even a facially lawful policy.

For what it is worth, this is precisely contrary to the memorandum I issued as General Counsel (which was specifically rejected by the NLRB in D.R. Horton). There, I said that lawful employer arbitration programs could be asserted as a defense to attempted class action court litigation. In my view, this would allow the courts, as they have traditionally done, to weigh whether a class action was necessary to vindicate substantive rights under the various employment statutes pursuant to which such claims are generally brought. It is that standard, I maintained, which ought to govern the legality of such class action waivers.

Topics:  Arbitration, Arbitration Agreements, Class Action, Class Action Arbitration Waivers, Collective Actions, D.R. Horton, D.R. Horton v NLRB, Federal Arbitration Act, NLRB, Non-Acquiescence

Published In: Administrative Agency Updates, Alternative Dispute Resolution (ADR) Updates, General Business Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Proskauer - Labor Relations | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »