Blow to Workers: Employers Can Wave Class Action Rights, Says Court of Appeals


By a 2-1 decision, the Fifth Circuit of the United States Court of Appeals issued a ruling Tuesday allowing employers to waive workplace grievance rights via class action lawsuit.  The decision reverses a National Labor Relations Board decision which found such agreements conflicted with federal law.  The decision is a victory for business interests looking to limit their liability and undermine overtime and unpaid wages.  


More via Denver Business Journal:

The Fifth Circuit U.S. Court of Appeals overturned the National Labor Relations Board, which decided that home builder D.R. Horton Inc. violated its workers’ rights by forcing them to agree to resolve all employment-related disputes individually through arbitration. The arbitration agreement prohibited workers from making class action claims against the Fort Worth, Texas-based company.

The NLRB concluded the company’s mandatory arbitration agreement violated the National Labor Relations Act because it required employees to waive their right to join together to challenge company decisions. The board also ruled that the agreement would lead employees to believe that they couldn’t file unfair labor charges with the NLRB.

The appeals court, however, overturned the NLRB’s decision, concluding the agency failed to give “proper weight” to the Federal Arbitration Act, which requires that arbitration agreements be enforced “according to their terms” unless Congress has specified otherwise. But the court agreed with the NLRB that D.R. Horton must clarify that the arbitration agreement does not preclude employees from pursuing claims of unfair labor practices with the NLRB.

The court’s decision to allow D.R. Horton to include a ban on class actions in its arbitration agreement is significant because many employers have taken this step in response to a boom in employment-related class action lawsuits.

The decision is a defeat for workers who typically experience easier wage recouping when they are able to band together.  The NLRB must now decide its course of action. The Wall Street Journal suggests the NLRB follows a “non-acquiesce” doctrine, meaning if they feel the appeals court was in the wrong they will ignore the rule until the issue is decided upon by the Supreme Court.  

Board member Craig Becker told the WSJ: “It would spell the end of employment class actions.”

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