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NLRB forces employers to review arbitration agreements

Continuing its recent high-profile, pro-union agenda, the NLRB has now turned its attention to employer-employee arbitration agreements.  Employers – even those whose employees are not represented by unions – must now review those agreements or risk an unfair labor practice charge.

In D.R. Horton, 37 NLRB No. 184, the Board held that an arbitration agreement that eliminates an employee’s ability to engage in a class or collective action is a per se violation of the National Labor Relations Act.  D.R. Horton required that its employees sign arbitration agreements as a condition of employment.  Among other things, these agreements required that all employment-related claims be arbitrated and also prohibited an arbitrator from joining the claims of one employee with the claims of another no matter how closely related they may be.  The combination of these two provisions eliminated any chance that employees could participate in employment-related collective or class action lawsuits or arbitrations.  This outcome, the NLRB concluded, was directly contrary to the NLRA’s staunch protection of employees’ rights to act in concert with one another to impact their terms and conditions of employment.

The NLRA is designed to cover the vast majority of employers in the United States regardless of whether their employees are unionized.  As a result, D.R. Horton will likely be broadly applied by the Board – and by Plaintiffs’ attorneys seeking yet another inroad into class and collective claims.  The Board’s position will also likely face scrutiny from federal judges, who will be forced to reconcile the Board’s interpretation of the NLRA with the Federal Arbitration Act, which requires significant deference to arbitration agreements and the decisions that result.

Until this issue is settled, employers with employee arbitration agreements must review the agreement to determine whether it affords employees the right to arbitrate or litigate a class or collective action.  If not, the agreement could could spawn an unfair labor practice charge.

For more information on the D.R. Horton decision, click here.