NLRB Again Rules Class-Action Arbitration Waivers Violate the NLRA

The National Labor Relations Board (“NLRB”) has once again ruled that class-action arbitration waivers are unenforceable under the National Labor Relations Act (“NLRA”).  In Murphy Oil USA, Inc., 361 NLRB No. 72 (Oct. 28, 2014), a company, Murphy Oil, required an Alabama employee to sign a binding arbitration agreement as a condition of employment.   The employee, Hobson, and three other workers subsequently initiated a collective action lawsuit against their employer over a number of alleged Fair Labor Standards Act violations.

Murphy Oil responded to the lawsuit by filing a motion to compel arbitration with the Alabama court.  In its motion, the company asked the district court to require the workers to arbitrate their claims individually.  The Alabama court granted Murphy Oil’s motion and ordered each of the workers to engage in arbitration in their individual capacity.

Meanwhile, Hobson filed a charge with the NLRB alleging her employer’s arbitration agreement violated the NLRA.  The NLRB agreed and issued a complaint against Murphy Oil over its purported unfair labor practice.  While the Alabama court case was stayed pending arbitral proceedings, the NLRB issued a decision stating the class-action waiver included in Murphy Oil’s binding arbitration agreement was unlawful.  The Board also directed the company to remove the provision from its employment contract.  Despite the majority’s rejection of contrary federal authority, two members of the NLRB disagreed with the Board’s written opinion in the case.

Murphy Oil has reportedly asked the nation’s Fifth Circuit Court of Appeals to review the case.  In 2013, the appellate court overturned a similar NLRB decision in D.R. Horton, Inc. stating class waivers included in an employer’s arbitration agreement violate a worker’s rights under the NLRA.  In that case, the Appeals Court ruled that such waivers are enforceable under the Federal Arbitration Act.

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