California Labor &
Employment Law Blog
Jul 13, 2012

NLRB Continues Attack on Arbitration Agreements

Topics: Arbitration Agreements, Class Actions

In a recent decision, a NLRB administrative law judge held that a company's mandatory employment arbitration policy violated the NLRA, even though the policy permitted class claims by agreement of the parties and otherwise allowed class claims seeking to challenge the enforceability of the arbitration agreement itself.  The ALJ relied on D.R. Horton in reaching the conclusion that the arbitration agreement violated employees' Section 7 right to engage in concerted activity.  The employer argued that the agreement was valid and not barred by D.R. Horton because the agreement expressly permitted class claims in certain instances.  The ALJ disagreed, reasoning that the provision allowing the parties to "agree" to arbitrate claims on a class basis was hollow.  According to the ALJ, because the agreement did not specify the circumstances under which the employer would ever make such an agreement, employees would have no reasonable basis to believe that they would be able to proceed with claims collectively or as a class.  As such, the provision still "chilled" employees' Section 7 rights.

Notably, the ALJ also found problematic a confidentiality provision in the employer's arbitration agreement, requiring employees to maintain confidentiality of arbitration proceedings conducted pursuant to the agreement.  The ALJ found that this provision chilled employees' rights to discuss the terms and conditions of their employment, also violating the employees' rights under the NLRA.  The case is Advanced Services, Inc. and Tabita Sheppard Howard, issued on July 2, 2012. This case is another illustration of the NLRB's commitment to enforcing D.R. Horton and continuing to strike down class waiver provisions in employment arbitration agreements under its jurisdiction.  This will continue to be problematic for employers with such provisions, if D.R. Horton survives appeal.  California employers of course should be aware that at least one California state court (Iskanian v CLS) has rejected D.R. Horton and enforced an employment arbitration agreement containing a class waiver.  Interestingly, the California Legislature also just killed proposed legislation (SB 491) that would have barred contracts precluding claims on a class basis.  It is certain that the enforceability of class waivers and other aspects of arbitration agreements will continue to be the subject of litigation in California, so stay tuned for further developments in this area.

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For over 25 years, CDF has distinguished itself as one of the top employment, labor and immigration firms in California, representing employers in single-plaintiff and class action lawsuits and advising employers on related legal compliance and risk avoidance. We cover the state, with five locations from Sacramento to San Diego.

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About the Editor

Robin Largent has a regular presence in California state and federal courts and has been lead defense counsel and appellate counsel for large and small California employers in litigation (and arbitration) ranging from individual discrimination and harassment claims to complex wage and hour representative and class actions. She also leads the firm’s appellate practice, having substantial experience and success handling appeals, writ petitions, and amicus briefs in both state and federal court on issues such as class certification (particularly in the wage and hour arena), manageability and due process concerns associated with class action trials, exempt/non-exempt misclassification issues, meal and rest break compliance, trade secret/unfair competition matters, and the scope of federal court jurisdiction under the Class Action Fairness Act.
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