The NLRB has decided to enter the fray in a big way as to the enforceability of arbitration agreements that do not allow for arbitration of class claims. On January 3, 2012, the NLRB ruled in D.R. Horton, Inc. and Michael Cuda, that it constitutes an unfair labor practice for an employer to require, as a condition of employment, that employees arbitrate claims as individuals rather than a class, unless a union has agreed to such arbitration provision. The NLRB found that such an agreement interferes with employees’ right to engage in protected concerted activity. This decision is a rebuke by the NLRB of two recent United States Supreme Court decisions: 14 Penn Plaza LLC v. Pyett and AT&T Mobility v. Concepcion. In these two cases, the Supreme Court decided, respectively, first to allow employers to require employees as a condition of employment to agree that an arbitrator (rather than a judge or jury) will decide any statutory claims the employee ever brings in a private proceeding, and second, to allow employers to require employees to have such statutory claims heard individually rather than as part of a class action arbitration. These decisions have been welcomed by employers as a potential means to effectively eliminate employer-related wage and hour and discrimination class action litigation.
Horton could reverse (or at least severely limit) the effect of these two decisions. The Horton decision may well end up being reviewed by the Supreme Court, and Congress may get involved. Employers who currently have arbitration agreements (not agreed to by a union) requiring arbitration of statutory claims on an individual basis should monitor the progress of this case carefully. In addition, employers with such agreements will need to consider whether they will suspend the requirement of individual (as opposed to class) arbitration pending further developments with regard to the Horton decision.