NLRB Disallows Employer Prevention of Class Actions

The National Labor Relations Board (NLRB) has decided that employers are no longer permitted to require workers to sign agreements barring them from entering class action or group employment lawsuits. According to the New York Times, it was determined that provisions of the National Labor Relations Act (NLRA) protecting the rights of employees to enter into collective action are considered superior to employer-forced contracts. Previously, employers were allowed to require their employees to sign agreements relinquishing the ability to enter into concerted action, instead forcing them into individual arbitration for work-related grievances.

The NLRB ruled that employer arbitration agreements violated Section 7 of the NLRA. According to the State Bar of Wisconsin, Section 7 of the NLRA gives employees the right “to engage in … concerted activities for the purpose of collective bargaining or other mutual aid or protection. …”  The NLRB added that arbitration can still be forced through agreements, “So long as the employer leaves open a judicial forum for class and collective claims, employees’ NLRA rights are preserved without requiring the availability of class-wide arbitration.” Essentially, employees are not forced to resolve problems through class action, but that option must be left open by the employer.

The NLRB decision is especially important considering the precedent that was set in the recent case, AT&T Mobility v. Concepcion. In this 2011 case, the U.S. Supreme Court ruled 5-4 that companies could use standard-form contracts to prohibit consumers from entering class action lawsuits. The NLRB determined that the Federal Arbitration Act, which the Court relied on for its decision in the previous case, is trumped by the 1935 National Labor Relations Act. Although the previous ruling by the Supreme Court makes it more difficult for consumers to file class action suits, employees are protected under this new decision by the NLRB. Cornell Professor Alex Colvin estimated that around 25% of nonunion employees sign agreements sending them to individual arbitration for any disputes. 

This ruling by the National Labor Relations Board is monumental for employees everywhere. The ability to enter into class action lawsuits against an employer is an incredibly powerful weapon for employees with serious grievances. Class action lawsuits pool resources to make it more feasible and cost-effective for employees to dispute employment practices. If you or a loved one has been mistreated by an employer, you may be eligible to enter into an overtime lawsuit to recoup unpaid overtime or underpayment in the form of back wages.