Arbitration Agreement Barring Class Litigation Violates The NLRA

The NLRB in D.R. Horton holds that the home builder violated the NLRA by conditioning employment on agreements providing that all employment disputes and claims would be resolved in arbitration, and foreclosing any litigation of "class" or "collective" claims in court or arbitration.

On January 6, the National Labor Relations Board (Board or NLRB) issued a long-awaited decision in D.R. Horton, Inc., 357 N.L.R.B. No. 184, dealing with whether a nonunion employer's mandatory arbitration agreement—requiring arbitration of all claims on an "individual" basis and precluding any "class" and "collective action" proceeding—violated the National Labor Relations Act (NLRA). A plurality consisting of Board Chairman Mark Pearce and Member Craig Becker ruled that home builder D.R. Horton's mutual arbitration agreement (MAA) violated the NLRA because it required employees—as a condition of employment—to forgo class and collective action court and arbitration proceedings.