In a long awaited decision in the D.R. Horton case, the 5th Circuit Court of Appeals ruled yesterday that an employer was within its rights to require employees to sign an arbitration agreement that mandated individual arbitration (i.e. not allowing for class claims). The National Labor Relations Board had taken the position that employees’ right to engage in concerted activity means that they cannot waive their right to participate in class or collective litigation or arbitration. The court disagreed, finding that the Federal Arbitration Act required that the arbitration agreement be enforced as written. This is a significant win for employers that seek to avoid class and collective actions by requiring employees to sign arbitration agreements that require that claims be brought individually. Employers using or considering such agreements should take heed, though, at the court’s finding that arbitration agreements need to make clear that they do not prohibit an employee from filing charges with the NLRB.
Court of Appeals Deals a Blow to NLRB and a Boon to Individual Arbitration