Disclaimer

The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.

 Skip to Content

NLRB Rules Against Class Action Waivers
January 10, 2012

On Friday, January 6, 2012, in D.R. Horton Inc. v. Michael Cuda, the NLRB issued a ruling that class action waivers of workplace claims can amount to an unfair labor practice under the National Labor Relations Act—that is, such waivers are unlawful. This ruling is highly controversial in light of recent charges of political maneuvering at the NLRB and because it may conflict with a ruling on arbitration waivers issued by the Supreme Court last year.

Businesses often require customers and employees to agree to arbitrate any disputes that may arise with the business, as a way to minimize expenses when resolving disputes. These arbitration agreements often include waivers of class action claims, meaning the customer or employee is agreeing to arbitrate her claim individually. Such waivers have been challenged as unconscionable and unconstitutional. Last year, however, in the context of a consumer class action, the Supreme Court held in AT&T Mobility v. Concepcion that rules banning class action waivers frustrate the purpose of the Federal Arbitration Act. So, at least in the context of consumer law, class action waivers are now permitted in arbitration agreements.

Friday, in D.R. Horton, the NLRB determined that the AT&T Mobility holding did not translate into the context of workplace disputes. In the context of an overtime claim, the NLRB determined that a class action waiver amounted to an unfair labor practice under the NLRA because it prevented employees from engaging in group ("associational") activity. The Board’s rationale is complex, but in essence, the Board concluded that whereas AT&T Mobility involved a conflict between the Federal Arbitration Act and state consumer law (and so raised Supremacy Clause issues), D.R. Horton involved a conflict between two federal statutes (the FAA and the NLRA).

This is far from over. The NLRB’s ruling can be (and likely will be) appealed to either the Eleventh Circuit Court of Appeals in Atlanta, or the Court of Appeals for the District of Columbia. A ruling by one of those Courts could go up to the U.S. Supreme Court.
Authored By
Image: James R. Wiley
James R. Wiley
Image: D. Matthew Allen
D. Matthew Allen
Related Practices
Labor & Employment
©2024 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.