The NLRB Invalidates Complete Class Action Waivers as a Condition of Employment

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The National Labor Relations Board (NLRB) has ruled that a non-union employer violates its employees’ Section 7 rights under the National Labor Relations Act by maintaining a policy that, as a condition of being hired, and/or, as a condition of remaining employed after being hired, an employee must agree to forego his or her right to bring a class action against the employer over wages, hours, or other terms and conditions of employment in any forum. The case is D. R. Horton, Inc., 357 NLRB No. 184, issued on January 3, 2012.

In D.R. Horton, Inc., the employer required all applicants and current employees to sign an agreement that required all employment-related claims to be submitted to arbitration for final and binding decision, restricted the arbitrator from hearing class or collective claims, and waived the employee’s right to file a lawsuit or civil proceeding relating to employment with the company and having such claims decided by a judge or jury. The employee filed a request to arbitrate his claim that the employer misclassified him as exempt under the Fair Labor Standards Act (FLSA). He sought to bring the claim as a collective action on his own behalf and on behalf of all similarly-situated employees. The employer responded by denying the right to file a collective action as stipulated in the agreement. The employee then filed a charge with the NLRB alleging that the employer’s requirement that an employee waive the right to bring a class or collective-type action unlawfully interfered with the right of employees to engage in protected, concerted activity for mutual aid and protection.

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