In two recent decisions, National Labor Relations Board Administrative Law Judges held employees’ class action waivers invalid because of the NLRB’s decision in D.R. Horton, Inc., which held that a waiver of an employee’s right to participate in a class or collective action that is obtained as a condition of employment violates Section 7 of the National Labor Relations Act.
One of the two recent decisions involved a class action on behalf of a group of Convergys Corporation call center representatives for unpaid overtime. The lawsuit alleges that the representatives regularly spent time working “off-the-clock” both before and after their shifts. Convergys moved to strike the class and collective action allegations on the basis of class waivers that the plaintiffs had signed when they applied for employment with the company. Convergys sought to distinguish D.R. Horton on the grounds that the class waivers at issue in its case had been signed when the plaintiffs were job applicants, not employees. ALJ Arthur Amchan rejected this argument because job applicants are considered employees under the NLRA. He also concluded that the absence of an arbitration agreement, which was present in D.R. Horton, did not render that case inapplicable.
In the other recent decision, involving 24 Hour Fitness USA Inc., ALJ William Schmidt held that a class action ban and a nondisclosure restriction contained in an employer’s arbitration policy unlawfully limited employees from exercising their rights under the NLRA. Also based on D.R. Horton, ALJ Schmidt ruled that 24 Hour Fitness’ mandatory arbitration policy, whereby employees waived their rights to participate in class or collective actions, violated employees’ rights to engage in concerted action under Section 7 of the NLRA. This was in spite of the policy’s giving the employees a 30-day window to opt out.
These decisions highlight the vulnerability of class and collective action waivers, and they should caution employers not to put too much reliance on such waivers unless D.R. Horton, which is currently on appeal to the United States Court of Appeals for the Fifth Circuit, is reversed.