NLRB Strikes Down Mandatory Arbitration Agreements Preventing Class Action, What Should Employers Do?

By Hanok George, Albany Government Law Review

On January 3, 2012, in D.R. Horton, Inc. and Michael Cuda, the National Labor Relations Board (NLRB) ruled that certain mandatory arbitration agreements that prevent employees from filing group or class actions in a judicial forum violates the National Labor Relations Act (NLRA).[1]  The ruling essentially bans employment agreements used by many companies that require employees to individually arbitrate all work-related claims.[2]  The Board’s ruling significantly alters what has become a “common dispute resolution practice for many employers” and is effectively skirting the U.S. Supreme Court’s favorable outlook towards arbitration of employment claims.[3]  Companies are undoubtedly angered by this new decision; many denounced the ruling saying “it is an invitation to vast class action lawsuits on issues that could be resolved out of court.”[4]  It is also argued by the respondent in this case and by supporting amici that this decision is in conflict with the Federal Arbitration Act (FAA).[5]  However, the Board holds that its ruling is not in violation of either statute.  In light of this decision, what should employers do to protect their arbitration agreements? Continue reading “NLRB Strikes Down Mandatory Arbitration Agreements Preventing Class Action, What Should Employers Do?”