Decision: In the later half of 2015, the National Labor Relations Board has continued to attack class action waivers in accordance with itsD.R. Horton and Murphy Oil USA decisions despite the fact that both decisions were reversed by the Fifth Circuit (and the NLRB’s en bancpetition in Murphy Oil USA was denied without recorded dissent).
On November 10, 2015, the Board held, in Amex Card Services Co., 363 NLRB No. 40, that American Express violated the National Labor Relations Act (the Act) by forcing its employees to sign arbitration agreements that included class action waivers. Then, on November 30, 2015, in U.S. Express Enterprises, Inc., 363 NLRB No. 46, the Board held that U.S. Express’s arbitration agreement—which also included a class action waiver—ran afoul of the Act even though an opt-out provision allowed employees to pursue legal disputes through a class action by providing written notice to the employer.
In both decisions, the Board concluded that the respective arbitration agreement violated the employees’ protected right to engage in concerted activity under D.R. Horton and Murphy Oil USA. The Board emphasized its view that arbitration policies that require individual arbitration rather than class actions violate the Act. In addition, the Board held in U.S. Express Enterprises, Inc., that even if an opt-out provision makes an arbitration agreement voluntary for each individual who does not opt out, any arbitration agreement that precludes collective action “is unlawful even if entered into voluntarily because it requires employees to prospectively waive their Section 7 right to engage in concerted activity.” Thus, according to the Board, even a voluntary arbitration agreement is prohibited if it contains a class action waiver that requires claims to be arbitrated on an individual, rather than a class, basis.
Impact: To date, the only federal court of appeals to consider the issue has rejected the NLRB’s view, as has the California Supreme Court. But the NLRB appears to persist in its policy of refusing to acquiesce in court rulings rejecting D.R. Horton and similar Board decisions. (Weaddressed this pattern more than a year ago when discussing theMurphy Oil USA case). Although the NLRB’s stance on arbitration agreements containing class waivers has been reversed on several occasions, Amex Card Services Co. and United Express Enterprises, Inc., demonstrate that the Board will continue to push its interpretation of the Act until forced to do otherwise. Anecdotal evidence suggests that the Board is also using its position to forcefully persuade companies to abandon arbitration policies with class waivers in settlement of NLRB charges, under the radar.
Amex Card Services Co. and United Express Enterprises, Inc., represent potential opportunities for another federal court of appeals to weigh in because section 10(f) of the Act permits an aggrieved party to seek relief in the circuit where the alleged unfair labor practice took place (Ninth Circuit in Amex and Sixth Circuit in United Express Enterprises), where the party resides or transacts business (in the case of Amex, this could be almost any circuit), or the DC Circuit (which always has jurisdiction to hear NLRB challenges).That being said, given the NLRB’s persistence, employers can reasonably expect that the NLRB will continue to apply D.R. Horton and Murphy Oil USA—making it necessary for employers to seek judicial review—for the foreseeable future unless the US Supreme Court intervenes in an appropriate case.