NLRB STARTS 2012 WHERE IT LEFT OFF IN 2011: SAYS WORKERS CAN’T BE FORCED TO SIGN CLASS WAIVERS

It can’t be a surprise that the National Labor Relations Board (“NLRB”) is again making the news as 2012 kicks off.  We certainly know after the number of times the agency was in the news in 2011 that it isn’t afraid of the spotlight.

A few weeks ago, after the lone Republican recused himself from the matter, the two remaining Democrats on the Board issued a decision which concluded that employers may not force employees to sign, as a condition of employment, an agreement requiring the arbitration of disputes if the agreement includes a waiver of the ability to bring a class claim over wages, hours or other working conditions because such a prohibition runs directly in conflict with Section 7 of the National Labor Relations Act (NLRA) which guarantees employees the right to bargain and organize collectively over those subjects.

Now, it’s hardly news that the Board wants to enforce rights under the NLRA.  It is, after all, the agency in charge of protecting employees’ interests under Section 7. 

What makes the Board’s decision in this case particularly interesting, however, is that it stands in stark opposition to the decision of the United States Supreme Court in AT&T Mobility v. Concepcion, which we discussed here, where the Court found that the Federal Arbitration Act (“FAA”) pre-empts state laws which say class waivers are impermissible.  In short, the Court came out in support of voluntary, agreed-to arbitration agreements, even if they waive class claims.

While the NLRB has come out and essentially shunned the notion that public policy favors two private parties coming to a consensus on an arbitration agreement, even if it involves a class waiver, this may be an issue that ultimately has to return to the Supreme Court.  The Board may not feel their decision, D.R. Horton, Inc. and Michael Cuda, Case 12-CA-25764, creates a conflict between the FAA and the NLRA – in fact, it went out of its way in the decision to try and illustrate how there was none in this case, and to limit the scope of its holding – but most observers probably feel otherwise.

Just when employers thought they had the lay of the land on whether these agreements could include a class waiver after AT&T Mobility , that’s certainly more in question now. Until this is sorted out, employers should exercise caution and consult competent counsel if they are thinking about either creating a new arbitration agreement or modifying an existing one to include such a waiver, or if they already have an agreement with such a provision in place.