NLRB Strikes Down Arbitration Agreement Containing Class Action Waiver

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A recent decision from the National Labor Relations Board (the “NLRB”) will likely make it more difficult for employers to obtain and enforce class action waivers in arbitration agreements. The NLRB’s decision in D.H. Horton, Inc. invalidated an arbitration agreement that prevented employees from filing claims with the NLRB or pursuing collective or class action claims in either arbitration or court. In the short term, the NLRB’s decision may provide employee-side attorneys with additional ammunition to prevent arbitration agreements from being enforced. Employers with arbitration agreements should carefully evaluate this decision, and other recent legal developments, to determine whether their agreements remain enforceable.

Why is this decision important to employers with non-unionized workplaces?

The D.H. Horton decision is an example of the NLRB’s recent efforts to reach into non-unionized workplaces. Most private sector employees are covered by the National Labor Relations Act (“NLRA”), even if they are not represented by a union. Supervisors, managerial employees and independent contractors are among the few individuals excluded from the protections of the NLRA. Section 7 of the NLRA grants covered employees the right to engage in “concerted activities for the purpose of . . . mutual aid or protection.” In other words, while Section 7 does not protect activities that an employee takes solely on his or her own behalf, the NLRA protects an employee’s actions when they are with or on behalf of at least one other employee, or on the authority of other employees that relate to their terms and conditions of employment.

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