Class action waivers are an important tool for employers with employee arbitration agreements to limit their exposure to proceedings initiated by employees or former employees on a classwide basis. Class action arbitration waivers have taken on even greater significance in recent years with the proliferation of collective actions under the Fair Labor Standards Act (FLSA), as such actions can be burdensome and costly to defend, even in an arbitral forum.
In the first days of 2012, the National Labor Relations Board (NLRB) shocked the employer community when, in D.R. Horton, Inc., 357 NLRB No. 184 (2012), it held that class action waivers by employees in arbitration agreements with their employers violated the National Labor Relations Act (NLRA). Nearly five years after D.R. Horton, employers face considerable uncertainty as to the legality of class action waivers in employee arbitration agreements. However, with a recently emerged circuit court split between appellate courts siding with and against the NLRB’s invalidation of employee class action arbitration waivers, it is more likely than at any point since D.R. Horton that employers finally will get legal clarity on this key issue.
The NLRB’s Invalidation of Employee Class Action Arbitration Waivers
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