NLRB Seeks Court Reversal on Arbitration Ruling

March 19, 2014

pic-nlrb-laborOn March 13, 2014, the National Labor Relations Board (NLRB) filed a petition with the U.S. Court of Appeals for the Fifth Circuit to reverse a ruling on a case (D.R. Horton Inc. v. NLRB) they made in December 2013. That ruling overturned a decision made by the NLRB that prohibited employers from using arbitration agreements in employment contracts to require employees individually seek arbitration to resolve contract disputes. Despite the court ruling against NLRB 2-1, NLRB is asking the panel to rehear the case on the basis that the issue is “exceptionally important” and that the appeals panel didn’t correctly apply the impact of two previous U.S. Supreme Court case.

The initial NLRB decision—made back in January of 2012—stems from rising class-action and collective-action lawsuits being brought against employers in recent years, prompting employers to include arbitration clauses in employment contracts and require employees to sign arbitration agreements prior to being hired. In its ruling, NLRB said that the Federal Arbitration Act cannot be used to prevent workers covered by the National Labor Relations Act (NLRA) from resolving disputes as a group.

In striking down the NLRB ruling, the Court of Appeals stated that the NLRB failed to give proper weight to the Federal Arbitration Act and that the use of class action procedures is “not a substantive right.” The court furthermore found that the NLRA does not include Congressional command that prevents arbitration agreements from being used.

This petition is yet another move from the NLRB to rehash policies that have been stalled, specifically the elections rule. NSBA will continue to monitor this situation and provide updates accordingly.