Non-Union Arbitration Agreement Violates Employee Rights, NLRB Says

Constangy, Brooks, Smith & Prophete, LLP
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In the first week of the new year, a two-member panel of the National Labor Relations Board, in D.R. Horton, Inc., concluded that mandatory arbitration agreements which required employees individually to waive the right to pursue claims on a class basis interfered with employees' rights to engage in concerted activity under Section 7 of the National Labor Relations Act. The decision is significant for a number of reasons, not the least of which is the fact that the employer was non-union.

According to the Board panel consisting of Chairman Mark Gaston Pearce (D) and Member Craig Becker (D), who was in his last day of a recess appointment (the decision was not actually issued until after Becker was gone), an employee's right to join in the concerted activity of filing a class lawsuit or claim was a substantive right within the Act's protection. The Board panel found that nothing in the Federal Arbitration Act insulated arbitration agreements from established principles under the NLRA. The Board's sole Republican member on the date of the decision, Brian Hayes, was recused and did not participate.

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