Recent Ruling That Class Action Waivers Are Illegal Shows NLRB Remains Active

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On January 3, 2012, the National Labor Relations Board (NLRB) ruled that a class action waiver in a mandatory employment arbitration agreement is illegal. D.R. Horton, Inc. and Michael Cuda, 357 NLRB No. 184 (2012). This decision comes less than a year after the U.S. Supreme Court upheld such a waiver in a consumer arbitration agreement. AT&T Mobility v. Concepcion, 131 S.Ct. 1740 (2011). Further, in the days since the D.R. Horton decision was published, the Supreme Court again has upheld a consumer arbitration agreement that contained a class action waiver. CompuCredit Corp. v. Greenwood, No. 10-948 (Jan. 10, 2012).

In D.R. Horton, the respondent company required its employees to execute mandatory arbitration agreements covering employment-related claims. Part of the agreement required the employees to pursue any such claims individually and not as a part of any class or collective action. Company employee Michael Cuda disregarded this portion of the agreement and filed a collective action in arbitration, which was rejected in accordance with the language of the agreement. Cuda then filed an unfair labor practice charge with the NLRB, claiming that his collective action claim was protected “concerted activity” under the National Labor Relations Act (NLRA), and that by disallowing the claim, the company violated the act.

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