by Jeremy Nash
The National Labor Relation Board's (NLRB) recent ruling
Horton Inc. answered an important question presented by the U.S.
Supreme Court's ruling last Spring in AT&T
Mobility LLC v. Concepcion: does federal policy favoring arbitration
apply equally in the consumer and employment contexts?
The NLRB's response was an emphatic "no," largely
agreeing with arguments advanced by dozens of organizations, including the National Employment Lawyers Association (NELA),
dedicated to representing individuals who often cannot safeguard their
fundamental labor protections in the workplace without class or collective
Although Concepcion arose in the consumer context,
some have construed the Supreme Court's ruling broadly as stating the Court's
approval of forced arbitration provisions in other contexts, including the
employment context. Indeed, the Arbitration
Fairness Act, which was first proposed in 2009, was reintroduced in
response to the Concepcion ruling and, if passed, will eliminate forced
arbitration clauses in consumer, employment and civil rights contexts. As we
last year, Abbey Spanier Rodd &
Abrams, LLP supports this legislation.
The particular contractual provision at issue in D.R.
Horton required plaintiff and other D.R. Horton Inc. employees to agree, as
a condition of employment, that they would not pursue class or collective
litigation of claims in any forum, arbitral or judicial. Although the general
intent of the Federal
Arbitration Act (FAA) manifests a liberal federal policy favoring
arbitration agreements, the NLRB found that such a provision runs afoul of the National Labor
Relations Act (NLRA).
The NLRA is a 1935 United States federal law that limits
the means with which employers may react to workers in the private sector who
create labor unions, engage in collective bargaining and take part in strikes
and other forms of concerted activity in support of their demands. The NLRA
does not apply to workers who are covered by the Railway Labor Act,
agricultural employees, domestic employees, supervisors, federal, state or
local government workers, independent contractors and some close relatives of
In ruling against D.R. Horton Inc., the NLRB concluded
that "employees who join together to bring employment-related claims on a
class-wide or collective basis in court or before an arbitrator are exercising
rights protected by Section 7 of the NLRA," which provides employees with the
right "to engage in... concerted activities for the purpose of collective
bargaining or other mutual aid or protection" (29 U.S.C. § 157) and that such
"forms of collective efforts to redress workplace wrongs or improve workplace
conditions are at the core of what Congress intended to protect by adopting the
broad language of Section 7." Slip Op., p.3.
Likewise, the NLRB found that the prohibition of
individual agreements imposed on employees as a means of requiring that they
waive their right to engage in protected, concerted activity lies at the core
of the prohibitions contained in Section 8, which makes it an unfair labor practice
for an employer "to interfere with, restrain, or coerce employees in the
exercise" of such right (29 U.S.C. § 158(a)(1)). Slip Op., p.5.
The NLRB decision provides a lengthy discussion of the
FAA and the Supreme Court precedent, including Concepcion, which you can
read in full here,
but explains why D.R. Horton seems to diverge as follows: it "rests not
on any conflict between an agreement to arbitrate and the NLRA, but rather
solely on the conflict between the compelled waiver of the right to act
collectively in any forum in an effort vindicate work-place rights and the
NLRA." Slip Op., p.13.
The NLRB got it right and, in our view, restored some
order to a corner of jurisprudence cast into disarray Concepcion. To
have reached any other result, as the U.S. Supreme Court has recognized, "could
frustrate the policy of the [NLRA] to protect the right of workers to act
together to better their working conditions." Eastex, Inc. v. NLRB, 437
U.S. 556, 567 (1978).
Abbey Spanier Rodd & Abrams, LLP, located in New York
City, is a well-recognized national class action and complex litigation law
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