A three-member majority of the National Labor Relations Board on October 28 reaffirmed employees’ right to bring class and collective action claims [pdf]. In a case against Murphy Oil USA, the Board stood by its earlier decision in D.R. Horton, Inc. [pdf] in which it ruled that requiring employees to waive their right to bring class and collective action claims and instead bring only individual claims against their employer in arbitration violates employees’ right protected by the National Labor Relations Act to engage in protected concerted activity. Over strenuous dissents of its two Republican members, the Board’s majority rejected the decision of the Fifth Circuit Court of Appeals, which denied enforcement of the Board’s decision in D.R. Horton, Inc., as well as decisions from the Second and Eighth Circuits, each of which disagreed with the Board’s interpretation of the Act and concluded that class and collective action waivers in arbitration agreements are enforceable under the Federal Arbitration Act and do not run afoul of the National Labor Relations Act.
As background, in 2012, the NLRB decided D. R. Horton, Inc., a case whose legacy we covered most recently in this blog in July. The NLRB concluded in D. R. Horton that an employer can’t force employees to pursue their claims individually. The Fifth Circuit disagreed, ruling in December 2013 it was lawful for an employer and an employee to enter into an agreement to arbitrate employment-related claims and to do so only on an individual basis, lawfully precluding class and collective actions brought on behalf of employees. The appellate court’s decision [pdf] held that the NLRA does not give employees a substantive right to pursue collective or class actions.
The NLRB majority’s decision this week in Murphy Oil indicates that the majority members considered the adverse judicial decisions that rejected their earlier decision in D.R. Horton, Inc., but concluded, “The core objective of the National Labor Relations Act is the protection of workers’ ability to act in concert, in support of one another.” On this general proposition, the majority once again – and in the face of nearly unanimous judicial authority to the contrary – held that employers cannot lawfully agree with employees that employment claims have to be brought individually and not collectively or by way of a class action.
An appeal is a near certainty. Thus, once again, a federal appeals court will take on the NLRB’s seemingly steadfast position. Although a different outcome is possible, it seems likely that an appeals court will reject the Board’s position, setting up the potential for Supreme Court review. The U.S. Supreme Court weighed in on a similar issue in June 2013, holding that agreements between companies and their customers or clients may contain class-action waiver clauses. That decision seemed to indicate the Court would uphold similar agreements between employers and individual employees, but yesterday’s NLRB decision specifically indicates that the Board sees no relevant Supreme Court precedent on the issue – drawing a distinction between commercial arbitration agreements and employment arbitration agreements.