Hunton Employment & Labor Perspectives

In the second half of December 2015, the National Labor Relations Board (“NLRB”) issued 16 rulings on the illegality of mandatory arbitration agreements containing class and collective action waivers, even in situations where the agreements allow employees to opt out of, or into, the waiver. The NLRB continues to hold firm that these types of waivers violate the National Labor Relations Act (“NLRA”) because they infringe upon the employees’ protected right to engage in concerted activity—despite the U.S. Supreme Court’s continued favoring of class action waivers, see, e.g., DirecTV, Inc. v. Imburgia, 577 U.S. __, 135 S. Ct. 1547 (2015), and the Fifth Circuit’s express rejection of the NLRB’s position in D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013), and in Murphy Oil USA, Inc. v. NLRB, No. 14-60800, 2015 U.S. App. LEXIS 18673 (5th Cir. Oct. 26, 2015).

The Fifth Circuit will address the NLRB’s position yet again in an appeal filed by 24 Hour Fitness, seeking review of the NLRB’s December 24 decision in which it held that the company’s arbitration agreement violates the NLRA even though the agreement contained a clause providing employees with a 30-day opt-out window. It is expected that the Fifth Circuit will rule the same as it has done in D.R. Horton and Murphy Oil and find 24 Hour Fitness’ arbitration agreement enforceable.

Given the NLRB’s patent disregard of federal court guidance, it will likely take more time and additional court intervention (and likely U.S. Supreme Court involvement) before the NLRB revisits its position. In the meantime, employers should continue to be aware of the disconnect between the NLRB and several federal courts on the issue of class and collective action waivers.