Monday, January 9, 2012

Individual arbitration agreements and the NLRB: There will be class actions

If the Obama Board were to run an advertising campaign concerning its work, it might well use the slogan Not just for unions anymore!  In its recent decision in D. R. Horton, Inc., a two member panel found that the employer could not force its employees to waive their NLRA rights to collectively pursue litigation of employment claims in all forums, arbitral and judicial.  The panel stated that as long as the employer leaves open a judicial forum, it can insist that arbitral proceedings be conducted on an individual basis.  The panel stated nothing in its decision was obligating employers to permit or to participate in class -wide or collective arbitration proceedings.  The panel also upheld the judge's finding that the procedure would causes employees to believe that they could not file charges with the Board and therefore was a violation of the Act.

The impact on employers?  Choose the forum that you want your employees to use when they process class or collective actions against you.  The focus of the decision is on employment claims, i.e wage/hour, discrimination, and anything that can be done by employees, which is far broader than day to day work place disputes.  The panel's holding is a cause for celebration with plaintiff's attorneys.

Activity which is covered  under the National Labor Relations Act is activity which is both concerted and protected.  The decision here finds concerted activity by relying upon the prior decision in Meyer Industries, 281 NLRB 882(1986).  The panel noted that concerted activity occurs when a single employee seeks to initiate or to prepare for group action.  As a result, an individual who files a collective or class action regarding wages, hours, or working conditions is engaged in protected conduct.

As it now stands, and it is almost certain the panel's decision will be challenged, employers cannot totally foreclose their employees from pursuing class or collective actions involving employment law.  The Obama Board has continued its broadening of the meaning of protected, concerted activity in the non union setting.  The decision is likely only the beginning of a much more expansive reading of the Act's coverage which will occur under the newly constituted Board.

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