NLRB Strikes Down Arbitral Class Action Waiver

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In D.R. Horton, Inc., 357 NLRB No. 184 (Jan. 3, 2012), the National Labor Relations Board, by a 2-0 vote, found that an arbitration agreement requiring “as a condition of employment” all employees to agree to waive the right to bring class or collective actions in any forum violated Section 8(a)(1) of the National Labor Relations Act (NLRA), which guarantees the rights of employees to engage in concerted, protected activity. The decision was issued by Board Chairman Mark Pearce and Member Craig Becker on January 3, 2012, the final day of Member Becker’s controversial recess appointment. Republican Board Member Brian Hayes was recused and did not participate in deciding the merits of the case. The decision has potentially wide-ranging implications for employers who have required employees to agree to arbitrate their disputes and at the same time waive the right to pursue their claims on a class or collective basis. The decision, however, also leaves open the possibility that agreements that are not “imposed” on employees may yet be enforceable, even if those agreements ban class or collective actions in any forum.

The D.R. Horton case involved a home builder with operations in more than 20 states that compelled each new and current employee to enter into an agreement requiring that an arbitrator hear only an employee’s individual claims without any authority to fashion a proceeding as a class or collective action or to award relief to a group or class of employees in one arbitration proceeding...

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