NLRB Restricts Use of Employment Class Arbitration Waivers

January 9, 2012

In D.R. Horton Inc. and Michael Cuda, Case 12-CA-25764, a decision that limits the U.S. Supreme Court’s ban on contractual waivers of the right to participate in class arbitrations, the National Labor Relations Board recently announced that employers cannot force their (non-supervisory, non-managerial) workers to give up all class claims as a condition of their employment.

"The decision is so sweeping," said Jay Waks, a partner in Kaye Scholer LLP’s New York office who regularly advises senior management of corporate clients on employment policy. “In considering options on advising clients, one of the things I focus on is the implication of simply carving out from an arbitration agreement with employees the possibility of permitting employees to participate in a court class action, but not an arbitration class action, in accordance with D.R. Horton.

"D.R. Horton does not bear on the validity for arbitration clauses in general," Waks added. "The right to require employees to consent to arbitration employment disputes is well established. This focuses on the validity of class action waivers, whether or not contained in arbitration."

Waks said that the case likely will be appealed to the federal courts for review. Waks will be addressing the impact of D.R. Horton in greater detail at the February 7, 2012 program on “Class Dismissed: Recent Trends in Class Action Litigation” that is being moderated by federal District Judge Nicholas Garaufis of the Eastern District of New York at the Federal Bar Council’s 2012 Winter Bench & Bar Conference, as well as in an article for the American Arbitration Association’s Dispute Resolution Journal (May 2012).

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