The National Labor Relations Board (the "NLRB") recently ruled that the Federal National Labor Relations Act (the "NLRA") precludes employers from requiring employees to sign arbitration agreements that include class action waivers. The NLRB held that employers violate the NLRA by requiring their employees to sign agreements precluding the filing of joint, class or collective claims addressing wages, hours or other working conditions in any arbitration or judicial forum. Although employers may require employees to arbitrate employment disputes, the NLRB held that such agreements must also provide a way for workers to bring group claims.
The NLRB's decision is a notable departure from the United States Supreme Court's decision last year, which held that the Federal Arbitration Act preempts state laws that invalidate class action waivers in arbitration agreements. The NLRB held that the Federal Arbitration Act does not override the provisions of the NLRA, which permits even private, non-unionized employers to participate in joint actions for their mutual aid and protection. We expect the NLRB's decision to be challenged on appeal but, unless and until overturned, employers should consider whether to revise their arbitration agreements now to eliminate any class action waiver provisions.
* Since the NLRB's decision, the US District Court for the Central District of California held that the NLRB's ruling did not apply to employees that had entered into arbitration agreements with class action waivers voluntarily and not as a condition of employment. The employees in that case, however, had failed to argue that they had not entered into the arbitration agreement voluntarily.
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