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Quintilone & Associates focuses in Class Actions, Employment Law, Personal Injury, Trade Secrets Litigation, and Business Litigation in Orange County, CA area.

The NLRB Holds that Class Action Waivers Violate NLRA

The NLRB Holds that Class Action Waivers Violate NLRA

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A big decision just hit the airwaves in the employment law world. The National Labor Relations Board (“NLRB”) recently announced its decision in D.R. Horton, Inc. In the case the NLRB considered whether an employer violates the NLRA when it requires employees to sign an agreement that precludes them from filing a class action addressing their wages, hours, or other working conditions against the employer. The Board found that such an agreement violates section 7 of the NLRA, which gives employees the right to engage in concerted activities for mutual aid or protection.

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In 2006, D. R. Horton Inc., a nationwide home builder, began requiring each of its employees to execute an arbitration agreement. The employees understood this agreement to be a condition of employment; meaning they would be terminated if they didn’t sign it. The agreement provided that all disputes relating to employment will be determined by arbitration. What is arbitration? Arbitration is a different form of dispute resolution as compared to filing a lawsuit in court. It’s a private form of adjudication where the parties pay from the judge. Arbitration also has fewer legal hoops for the lawyers to jump through when preparing and presenting a case. D. R. Horton’s arbitration agreement stated that the arbitrator may hear only employee’s individual claims, not class actions. It also provided that employees waived the right to file a typical lawsuit or other civil proceeding relating to their employment.

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Michael Cuda was a superintendent for D. R. Horton and brought a nationwide class action in court asserting that D. R. Horton misclassified its superintendents as exempt from the protections of the Fair Labor Standards Act (FLSA). This means that Cuda believe he should be paid on an hourly basis, not on salary. That way he could earn overtime. The employer replied that Cuda failed to give an effective notice of intent to arbitrate, stressing that the agreement bars arbitration of collective claims.

 

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Cuda’s attorneys responded by filing an unfair labor practice charge, alleging that the employer violated Section 8(a)(1) of the NLRA by maintaining an agreement that the arbitrator may hear only individual claims.

 

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The Board saw through the employers’ argument and held the arbitration agreement violates the NLRA because it requires employees, as a condition of their employment, to refrain from bringing collective or class claims in any forum. They cannot proceed in court, because the arbitration agreement waives their right to a judicial forum; and they cannot proceed in arbitration, because the arbitration agreement prohibits the arbitrator from awarding collective relief.The Board and the courts have long held that the NLRA protects the right of employees to bring legal action addressing their wages, hours, and working conditions. This includes the right to bring employment-related claims on a classwide or collective basis.

 

“Rather,” the Board stated, “we hold only that employers may not compel employees to waive their NLRA right to collectively pursue litigation of employment claims in all forums, arbitral and judicial. So long as the employer leaves open a judicial forum for class and collective claims, employees’ NLRA rights are preserved without requiring the availability of classwide arbitration.  Employers remain free to insist that arbitral proceedings be conducted on an individual basis.”

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What does this mean for the average worker? If your employer made you sign one of these agreements, do not worry, it may not be enforceable. You shoudl be able to bring a class action in court.  For employers, you may want to have these reviewed before using them. Any questions please contact Richard E. Quintilone II, Esq. at req@quintlaw.com

Quintilone & Associates focuses in Class Actions, Employment Law, Personal Injury, and Business Litigation in Orange County, CA area.