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.
NLRB Rulings
Employment Law Update: A Look Back and a Look Ahead
This year, LP’s Labor & Employment attorneys tried something different with our annual “Employment Law Update” and hosted the program as a webinar. The new format allowed us to record this year’s program and make it available for all our blog friends, colleagues and clients who were unable to participate. LP labor and employment attorneys Peter Donati, Laura Friedel and Kenneth Kneubuhler highlighted recent updates in labor and employment law and tips to keep your workplace practices current.
You can find the recording here and the presentation materials here.
To give you an idea of what topics are covered in this year’s “Employment Law Update” here are the topics we discussed:
•The impact of recent Supreme Court decisions on supervisor liability and the burden of proof for retaliation claims
• Trends involving arbitration agreements: Will they prevent class claims? Should your business be using them?
• Same sex marriage: How it affects employee rights under the FMLA and benefit plans
• Recent Illinois cases involving non-compete agreements. Will your agreements be enforceable when you need them?
• New developments at the National Labor Relations Board that affect both union and non-union workplaces
• How to properly use background checks to avoid scrutiny by the EEOC and avoid violating state laws
• Current wage and hour issues, including developments involving interns and independent contractors
• Other important state law trends, including laws on concealed weapons, medical marijuana, and social media passwords
Tide Continues in Favor of Class Action Waivers in Arbitration Agreements
On Friday, the U.S. Court of Appeals sitting in New York handed down its decision in Sutherland v. Ernst & Young, giving employers yet another leg up in enforcing requirements that their employees forego class actions and pursue their claims individually in arbitration.
Since the Supreme Court’s decision two years ago that a class action waiver in an arbitration agreement was enforceable (which, practically, means that a party can avoid class actions if it’s agreed to in advance in an arbitration agreement), plaintiffs’ attorneys and government agencies have been trying to find exceptions to the Court’s holding in the employment context. The three primary arguments have been (1) that the National Labor Relations Act gives employees an unwaiveable right to participate in collective litigation, (2) that the Fair Labor Standards Act’s special provisions for collective (opt-in) actions trump the Federal Arbitration Act, and (3) that plaintiffs can’t be required to arbitrate individually if their claims are so small that individual actions are impractical. The third of these arguments was rejected by the Supreme Court this June in the Amex decision. In the Sutherland decision last week, the Second Circuit Court of Appeals joined the majority of courts in rejecting the first and second arguments as well.
What does this mean for your business? It means that you should seriously consider implementing a mandatory arbitration policy that requires individual arbitration of employee claims. Arbitration isn’t perfect – and a requirement that cases be arbitrated individually could be turned against an employer if a large group of employees each files an individual claim – but in many cases the downsides of arbitration are far outweighed by the ability to avoid class actions.
The Employment Lawyers 