Labor Board Nulls Arbitration Agreement With Non-Union Employees

In what could be a stunning upset of private arbitration agreements, the National Labor Relations Board ("NLRB") has held that provisions in an arbitration agreement that prevent an arbitrator from considering a group, class or collective action violates the National Labor Relations Act and are unenforceable.

As a condition of employment, D. R. Horton, Inc., a national home builder, required employees to sign an arbitration Agreement by which the employees agreed to submit all employment disputes to final and binding arbitration. In addition, the Agreement provided that, while the arbitrator would have the right to resolve an individual's claim, he/she would not have jurisdiction to resolve group, class or collective disputes.