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One of the hot issues in the courts is whether an employer can
require its employees to sign an arbitration agreement which waives
the right to bring a class or collective action. Obviously, such
agreements, if valid, would be a game changer in fighting back
against the increasing tide of wage and hour litigation. Even if an
employer is not a big fan of arbitration generally, one would
presumably be able to tailor a limited arbitration agreement for
wage and hour claims, which would effectively eliminate the risk of
class actions in this area.
In the Fifth Circuit Court of Appeals, the case to watch is DR
Horton, where the homebuilder is appealing an NLRB decision finding
that such waivers violate the National Labor Relations Act. The
homebuilder filed its opening brief last week arguing that the NLRA
only protects employee rights to collectively assert legal rights
in bargaining and not a non-waivable right to invoke class
procedures in the adjudication of those claims under other
statutes. Basically, the argument is that the NLRB overstepped its
authority in attempting to regulate the procedures for how
employees pursue claims under completely unrelated statutes. If DR
Horton prevails in this case, it will remove one of the last
remaining hurdles in enforcing class action waivers, as the Supreme
Court has already ruled that such waivers are allowed under the
Federal Arbitration Act (Concepcion v. AT&T Mobility
LLC, 131 S.Ct 740 (2011)), which trumps state law.
On a related note, a California appeals court (not the most
employer friendly of jurisdictions), ruled last week that class
action waivers are valid and that California precedent contrary to
the Concepcion ruling had been overruled by the Supreme
Court. See Iskanian v. CLS Transportation. The
California court likewise rebuffed the NLRB's controversial DR
Horton decision (noted above) and had no trouble finding that the
waiver was lawful and not in violation of public policy. Obviously,
this case will be appealed to the California Supreme Court, but it
is a good sign that these types of waivers just might be the
solution that employers have been looking for in this area.
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