National Labor Relations Board Limits Class Action Waivers in the Employment Context

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Last year, in the landmark decision AT&T Mobility v. Concepcion, the U.S. Supreme Court upheld the use of class action waivers in consumer arbitration agreements under the Federal Arbitration Act (“FAA”). The breadth of the Supreme Court’s opinion in AT&T Mobility was an open question, however, particularly the extent to which it permitted class action waivers in employment arbitration agreements. In a much-anticipated decision that attempts to answer this question, a plurality of the National Labor Relations Board (“Board”) issued an opinion last week invalidating class action waivers in the employment context, holding that such waivers violate the National Labor Relations Act (“NLRA”).

In D.R. Horton and Michael Cuda, the employer required all employees to sign a Mutual Arbitration Agreement (“MAA”) as a condition of employment, which provided that all employment-related disputes would be handled exclusively through final and binding arbitration, that the arbitrator had no authority to consolidate claims or award relief to a group or class of employees, and that employees waived the right to file a lawsuit or other civil proceeding to adjudicate employment disputes. When an employee gave notice of his intent to initiate a class arbitration for alleged wage and hour violations, the employer responded that a class claim would violate the MAA. Soon thereafter, the employee filed an unfair labor charge with the Board, asserting that the class waiver in the MAA violated the NLRA.

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