NLRB prohibits class action waiver in employee arbitration agreement

By Stacey Mark
January 9, 2012

The National Labor Relations Board is in the news again, this time in connection with employee arbitration agreements.  In D.R. Horton, Inc. and Michael Cuda, Case No. 12-CA-25764, two members of a three-member panel (the third member recused himself without explanation) held that an arbitration agreement required as a condition of employment may not preclude employees from engaging in concerted activity.  The two panel members held that the arbitration agreement at issue, under which employees waived their right to a judicial forum and agreed to bring all claims to an arbitrator on an individual basis, violated section 7 of the NLRA, which gives employees the right to engage in concerted activities for mutual aid or protection. Imposing the agreement on employees as a condition of employment violated section 8(a)(1) of the Act and, therefore, constituted an unfair labor practice.

While employers "remain free to insist that arbitral proceedings be conducted on an individual basis," the Board concluded that employers must "make it clear to employees that the agreement does not constitute a waiver in all forums of their right to maintain employment-related class or collective actions and does not restrict employees' right to file charges with the National Labor Relations Board."

The conclusion is arguably at odds with the recent U.S. Supreme Court opinion in AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011), which upheld a consumer arbitration agreement prohibiting class action despite contrary state law. The Board expressly considered Concepcion, but found, in essence, that its decision did not conflict with the Federal Arbitration Act (while strongly suggesting that if such a conflict existed, the NLRA should prevail over the FAA).  

The NLRB's ruling was issued on the same day one of the two signatories to the opinion stepped down as his recess appointment expired.  Although only two Board members voted, the decision appears to be valid under the requirements of New Process Steel v. NLRB, 130 S. Ct. 2635 (2010), which permits a decision by only two Board members if a third member is disqualified.  President Obama appointed three new recess appointments to the Board the following day.


It's good they cleared this up. I think the wording was kind of confusing before, and misleading to employees. The wording itself sounds like if you sign an arbitration agreement, you are waiving your legal right to protection if something were to happen down the line. This is not necessarily the case.

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