NLRB Rejects No Class Action Arbitration Agreements, Again
The National Labor Relations Board (NLRB) is not backing down on its position that employees have a right to bring claims against their employers collectively, which cannot be waived.
The Board’s decision comes at time when employers are more and more frequently forcing their employees to sign arbitration agreements which forfeit many of the legal rights they would have in court, including the right to bring class actions.
Why is the right to collective action so important for workers?
Over the last decade or so, the vast majority of multimillion-dollar judgments and settlements against employers have been in class action cases. In these cases, typically, the harm to individual employees may be relatively small. As such, given that the typical employment claim is handled on a contingent fee (meaning the attorney is paid from a percentage of the recovery), a claim worth only a few hundred or a few thousand dollars will not justify attorney representation, and will not be pursued. However, if claims are brought collectively, the hundreds or thousands of small claims grouped together creates a claim large enough for an attorney to take a on a contingent fee and the aggrieved employees are able to enjoy legal representation without having to pay out-of-pocket legal fees.
Put more simply: If an employer is failing to pay its employees all of their wages, and is saving millions of dollars a year doing so, the company’s employees can join together as a class and recover their wages. If the employer forces them all to sign an arbitration agreement stating they cannot proceed together, but must do so individually, few if any employees will ever seek to recover their wages and it is a near certainty the employee with have to do so without the help of an attorney.
Putting the Board’s Decision in Context
On October 28th, the majority of the Board struck down an employer’s arbitration agreement which would have precluded the employees from pursuing claims jointly, collectively, or as a class against the employer. Murphy Oil USA, Inc. and Sheila M. Hobson, Case No. 10–CA–038804 (October 28, 2014). In essence, the NLRB finds that Section 7 of the National Labor Relations Act (NLRA) protects the rights of both unionized and non-unionized employees to act in concert in support of improving their work conditions.
The Boards decision follows its 2012 decision in D. R. Horton, Inc., rejecting a similar agreement and finding a substantive right to proceed collectively. 357 NLRB No. 184, slip op. at 1 (2012). Since that decision, the Courts of Appeals for the 2nd, 5th, and 8th Circuits have rejected the Board's approach, and the 9th Circuit has expressed its disagreement, but in dicta.
All of this raises the question of what the future of D. R. Horton and “no class action” forced arbitration agreements will be. Murphy Oil will likely be appealed and if the weight of federal authority rejecting D. R. Horton, Inc. can be used to predict the outcome, it will be reversed. The Supreme Court could choose to weigh in on the topic, which it has not already. In 2013 in AT&T Mobility, LLC v. Concepcion the Supreme Court, to the dismay of many consumer advocates, upheld similar agreements imposed on consumers. However, there are important differences between consumer and employment arbitration agreements the Supreme Court will have to consider.
If you have been presented with an arbitration agreement by your employer or if you believe you have a claim but have signed an arbitration agreement, a Hawks Quindel attorney can work with you to evaluate if the agreement is enforceable or to evaluate whether you should enter into the agreement. A Madison Hawks Quindel attorney can be reached at (608) 257-0040, a Milwaukee Hawks Quindel attorney can be reached at (414) 271-8650.