NLRB Continues to Rule that Class Arbitration Waivers Violate the NLRA

In December, the National Labor Relations Board (“NLRB”) continued its recent trend of issuing decisions that state class action arbitration waivers included in employment agreements violate a worker’s federal rights despite recent contrary appellate court rulings. In two of those cases, the employer has filed a petition for review with the United States Court of Appeals for the Fifth Circuit.

In Employers Resource v. NLRB, No. 31-CA-097189, the Board ruled that an employer violated Section 8(a)(1) of the National Labor Relations Act (“NLRA”) “by maintaining and enforcing an arbitration provision that requires employees, as a condition of employment, to waive their rights to pursue class or collective actions involving employment-related claims in all forums, whether arbitral or judicial.” Similarly, the NLRB stated in 24 Hour Fitness USA Inc. v. NLRB, No. 20-CA-035419, that a class arbitration waiver violated a worker’s rights despite that it included an opt-out provision. Although both cases were brought against California employers, 24 Hour Fitness filed a petition for review with the Fifth Circuit on January 5th and Employers Resource did the same on January 14th.

If the employers’ petitions are accepted, the Fifth Circuit is likely to overturn the NLRB’s rulings. In 2013, the Court of Appeals held in D.R. Horton, Inc. that class waivers included in an employer’s arbitration agreement are enforceable under the Federal Arbitration Act.  Last October, the appellate court adhered to its earlier decision and overturned the NLRB’s ruling that class-action arbitration waivers are unenforceable under the NLRA in Murphy Oil. (You can read more about that case in a prior Disputing blog post.) Given the apparent showdown between the NLRB and the courts, the issue may ultimately make it to the United States Supreme Court in the not too distant future.

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