In a win for employers, the Fifth Circuit recently rejected the National Labor Relations Board's (NLRB) request for an en banc review of the Fifth Circuit's ruling enforcing collective/class action waivers in arbitration agreements. 

 

The Fifth Circuit's decision to deny review comes on the heels of the Fifth Circuit's ruling in D.R. Horton, Inc. v. National Labor Relations Board.  In D.R. Horton, the Court rejected the NLRB's controversial rule that the National Labor Relations Act (NLRA) prohibited employers from requiring employees to enter into arbitration agreements that restricted employees from pursuing claims in a collective or class action.  Like most NLRB decisions, the rule applied to most private employers, regardless of unionization.     

 

The Fifth Circuit held the NLRA, which protects employees' rights to engage in certain protected, "concerted" activities, does not create a substantive right for employees to use class or collective action proceedings to resolve disputes with their employers.

 

Despite the Fifth Circuit's decision, employers should be prepared to defend against attacks on arbitration agreements.  The NLRB may continue advocating its position that collective/class actions waivers violate the NLRA and appeal to the U.S. Supreme Court.  Further, employee arbitration agreements can be problematic for many other reasons, such as extra costs; the possibility of inviting extra employee claims; state-specific rulings relating to class waivers; and courts finding certain arbitration or waiver terms "unconscionable" or against a state's public policy.  The pros and cons of arbitration agreements and class waivers should be carefully weighed before any decisions are made in this area.

 

We will continue to monitor this issue.

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