The D.R. Horton Arbitration Saga: Now What?

The D.R. Horton Arbitration Saga: Now What?

 The long awaited decision of the 5th Circuit in D.H. Horton, Inc.. v. NLRB was issued on Tuesday, and a split panel disagreed with the NLRB that the employer violated the Act by requiring employees to sign an arbitration agreement which precluded participation in class actions [an enhanced version of this opinion is available to subscribers]. The provisions of the arbitration agreement meant that employees could not pursue class or collective claims in either an arbitral or judicial forum; all employment related disputes were to be resolved through individual arbitration. The court did uphold that finding that a reasonable employee could read the agreement as prohibiting the filing of an unfair labor practice with the NLRB.

So, do employers with similar policies no longer have to worry about having their policies be found in violation of the NLRA?  Not quite. The NLRB has, over the years, adopted a practice of non-acquiescence which means that it does not feel obligated to follow decisions from the court of appeals. It will treat the decision in Horton as the law of the case but will not necessarily abandon its position on waiver of class actions. The NLRB is saying in effect "you're not the boss of me."  The NLRB believes that because of expertise and its national jurisdiction to interpret the Act, it will not change its interpretation based on a single appellate decision. It will of course listen to the Supreme Court.

What does this mean for employers?  In the short term, they should expect the Regions to continue to apply the Board version of Horton until there is a decision by the Board reversing the decision. Frustrating for employers?  Of course. More time and money will have to be spent defending the cases until either the Board decides to change it position or until the Supreme Court rules. Employers in the 5th Circuit, for now, can feel comfortable that similar arbitration provisions will be upheld if they have to have a Board decision reviewed.

 For additional Labor and Employment law insights from John Holmquist, visit the Michigan Employment Law Connection.

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