On January 6th, the National Labor Relations Board issued a ruling that employees could not be compelled to sign arbitration agreements as a condition of employment. These arbitration agreements are sometimes used to prevent non-union employees from filing class-action labor lawsuits against employers who violate labor law in the way they classify employees.
The decision examined one such agreement used by nationwide homebuilder D.R. Horton, under which employees waived their right to a judicial forum and agreed to bring all claims to an arbitrator on an individual basis. The agreement prohibited the arbitrator from consolidating claims, fashioning a class or collective action, or awarding relief to a group or class of employees.
The Board found that the agreement unlawfully barred employees from engaging in “concerted activity” protected by the National Labor Relations Act. The Board emphasized that the ruling does not require class arbitration as long as the agreement leaves open a judicial forum for group claims.
This is good news for most employees who face intentional misclassification by employers seeking to avoid paying overtime. They can now form classes and sue under the class-action lawsuit process.
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