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On October 28, 2014, the National Labor Relations Board (NLRB) stubbornly reiterated its stance that pre-employment arbitration agreements with class and collective action waivers are unlawful.
In Murphy Oil USA, Inc., the Board reaffirmed the position adopted in D.R. Horton that pre-employment arbitration agreements waiving the right to collective and class actions run afoul of core substantive rights under the National Labor Relations Act (NLRA). Specifically, the Board claims such agreements unlawfully restrict employees’ right to engage in “concerted activities for the purpose of . . . mutual aid or protection.”
The Board’s decision flies in the face of numerous contrary court opinions, including Supreme Court precedent, which unambiguously hold that arbitration agreements must be rigorously enforced in all instances except where Congress has expressly mandated otherwise. The only caveat to this rule is that the complaining party must be able to effectively vindicate its statutory substantive rights in the arbitral forum.
In his dissent, NLRB Member Johnson criticizes the majority for attempting to transform a procedural limitation on the manner in which claims may be brought into a violation of a substantive right. He further states that the Act’s generalized provision about the right to engage in concerted activities does not constitute a congressional command that the Federal Arbitration Act be overridden.
The continued discord between the NLRB and the courts has significant implications for employers, who must remain wary of including class action waivers in their pre-employment arbitration agreements despite case law authorizing them to do so. While the NLRB seems to be gearing up for a petition to the Supreme Court, the Court is unlikely to grant certiorari in the absence of a circuit split. Thus far, the federal courts that have addressed the issue of class action waivers in arbitration agreements subject to the NLRA have sided with Member Johnson.