Employers throughout Pennsylvania and the country routinely utilize arbitration agreements in the management of employees to minimize potential expense and exposure of litigation in courts. When used properly, these arbitration agreements can streamline employment disputes in a cost-effective and confidential manner. In fact, many arbitration agreements require that disputes be pursued individually, with employees waiving their ability to bring class and collective action claims. While these types of agreements have been enforced by courts throughout the country for many years, more recently the National Labor Relations Board (NLRB) has attempted to eradicate the use of class action waiver provisions in these agreements.

To date, the U.S. Court of Appeals for the Third Circuit and federal district courts in Pennsylvania have not addressed the specific issue of whether or not class action waivers violate the “concerted activities” provision of Section 7 of the National Labor Relations Act (NLRA). However, based upon arguments held on Oct. 5, in the case of Rose Group d/b/a Applebee’s v. National Labor Relations Board, the Third Circuit is poised to weigh in on this important issue. On review before the Third Circuit is a split panel (2-1) decision of the NLRB wherein the NLRB held that arbitration agreements that employees executed at the time of hire at Applebee’s violated the NLRA because they precluded class and collective actions. In its decision, the NLRB specifically relied upon its reasoning from a prior NLRB decision in D.R. Horton. Rose Group d/b/a Applebee’s Restaurant, 2015 NLRB Lexis 932, *2-3 (2015).

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