NLRB Says Arbitration Agreements That Waive Class Actions Are Illegal

01.09.2012

Last Friday, the National Labor Relations Board (NLRB) issued its decision in D.R. Horton, Inc., concluding that private arbitration agreements that require employees to waive their right to pursue class actions are illegal because they interfere with the employees' rights to engage in collective activities protected by federal labor law.

According to the NLRB, an employer that wants to have a mandatory arbitration program for employment claims has two alternatives: either allow class actions to be pursued through the program to arbitration or allow employees to pursue class or collective actions in court. In the latter alternative, apparently, the employer could preclude class actions in arbitration.