Eighth Circuit Rules That NLRB Erred By Invalidating Employment Agreements Requiring Individual Arbitration

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We previously reported on a federal circuit split that has developed over the enforceability of arbitration provisions waiving class actions in employment agreements. Compare December 19, 2013 (D. R. Horton) and November 9, 2015 (Murphy Oil) with June 6, 2016 (Lewis). The Eighth Circuit recently fortified its position on the side of holding that such class waivers are enforceable. Specifically, the Eighth Circuit analyzed whether the NLRB erred by finding that a mandatory individual arbitration clause in an employment agreement violated sections 7 and 8(a)(1) of the National Labor Relations Act by (1) requiring the employee to arbitrate “[a]ll claims, disputes, or controversies” related to employment; (2) waiving the employee’s right to maintain a class action; and (3) allegedly leading employees to believe that they could not file a grievance with the National Labor Relations Board.

Following a prior ruling of the Eighth Circuit as well as rulings by the Fifth Circuit in D.R. Horton and Murphy Oil, the court held that the employer “did not violate section 8(a)(1) by requiring its employees to enter into an arbitration agreement that included a waiver of class or collective actions in all forums to resolve employment-related disputes.” The Court did find, however, that NLRB properly ruled that the language of the arbitration clause, which included a broad requirement that “[a]ll claims, disputes, or controversies arising out of, or in relation to” employment with the company “shall be decided by arbitration,” was overly broad and should have contained language informing the employee that they retained the rights to file charges with the NLRB. Cellular Sales of Missouri, LLC v. National Labor Relations Board, No. 15-1620 (8th Cir. June 2, 2016).

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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