Readers of our series of posts on D.R. Horton will recall our prediction that the National Labor Relations Board (NLRB or the Board) would continue its attacks on certain arbitration agreements. As predicted, the NLRB’s administrative law judges (ALJ) continue to strike down any arbitration agreements that waive class or collective action claims and allow arbitration of only individual claims. The ALJs consistently find that such agreements violate employees’ Section 7 rights to engage in protected concerted activity.
Most recently, in Network Capital Funding Corp. (March 5, 2014) , another ALJ found an arbitration agreement violated Section 7 not on the agreement’s language, but rather based on the employer’s attempted enforcement. There, the employer argued that due to the silence in the arbitration agreement on whether or not class or collective claims were allowed, the agreement allowed for only individual, not class arbitration. On that basis, the employer opposed the former employee’s attempt to pursue class relief in arbitration. The ALJ ruled, based on D.R. Horton, that since the employer took that position in the arbitration proceedings, then the agreement violated Section 7.
The employer argued to the ALJ that numerous federal circuit courts had rejected the Board’s substantive reasoning in D.R. Horton. The ALJ explained that he was bound by NLRB precedent (i.e., the D.R. Horton ruling) until the U.S. Supreme Court or the Board itself said otherwise.
So, while D.R. Horton continues to languish in the appeal process, employers continue to face the costs – and the headaches – of trying to enforce arbitration agreements that provide for only individual arbitrations, or that are enforced as such. These costs and headaches continue even though virtually every circuit court to consider the issue has rejected the Board’s substantive reasoning in D.R. Horton.
So, one might ask, what incentive does this current NLRB have to rush an appeal to the current U.S. Supreme Court? Not much.