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. Continue reading this entry
Tag Archives: Arbitration
Employers Should Take a Hard Look at Arbitration
Posted in Human Resources/ Employer MattersAs evidenced by some recent federal court decisions, employers should be carefully considering the benefits of implementing mandatory arbitration provisions, which include waivers of the right to bring a class action, for all employment-related claims. In Dauod v. Ameriprise Financial Services, Inc., Case No.: 8:10-cv-00302 (D.C. Cal. 10/12/11), employees sought to bring a class action alleging various wage hour violations. Relying on the U.S. Supreme Court’s 2011 decision in AT&T Mobility LLC v. Concepcion (http://tinyurl.com/6azuf4n), discussed in the May 10, 2011 edition of Legal News: Employment Law Update, the California federal court dismissed the class action and instead forced each plaintiff to arbitrate his or her claims individually.
Amendment to Defense Spending Bill Restricts Use of Employee Arbitration Agreements
Posted in New and Recent LegislationIt has become increasingly common for employers to require employees to agree to mandatory arbitration of any employment-related disputes. Among some of the advantages, arbitration can be less costly than litigation and avoids the potential risk of exceedingly large jury damages awards. A recently signed bill, however, gives some employers who rely on arbitration clauses reason to pause.
On December 19, 2009, President Obama signed the 2010 Defense Appropriation Bill into law. This bill does more than dole out funds to the Department of Defense. The measure includes an amendment submitted by Senator Al Franken that prohibits Department of Defense contractors with qualifying contracts from requiring their employees to arbitrate Title VII claims and torts "related to or arising out of sexual assault or harassment."
Specifically, the “Franken Amendment” provides that any employer with a defense contract worth more than $1,000,000 must agree not to:
- require any employee to agree to mandatory arbitration of any claim under Title VII or any tort related to or arising out of sexual assault or harassment as a condition of employment; or
- take any action to enforce any provision of an existing agreement with an employee or independent contractor that requires mandatory arbitration of Title VII claims or torts related to sexual assault or harassment.
The new legislation does not appear to prohibit an employee from voluntarily agreeing to arbitrate a claim, nor does it appear to apply to mandatory arbitration of certain types of claims, such as wage and hour or contract disputes. Nonetheless, the bill’s language makes it clear that the prohibition on arbitration is broad. For one thing, this prohibition applies to all of a contractor’s employees, not just those who work on defense projects. Additionally, another section of the Franken Amendment requires contractors to certify that as of June 10, 2010, their subcontractors have agreed to the arbitration restrictions with respect to work related to the covered subcontract, thus ensuring that the effects of this bill will be felt beyond only those employers who directly contract with the Department of Defense.
All Defense contractors and companies that do business with Defense contractors should immediately review their policies and arbitration agreements, if any, to ensure compliance with the Franken Amendment.