The National Labor Relations Board (NLRB or Board) in a case against D.R. Horton, Inc. (Case No. 12-CA-25764) is poised to decide the question of whether an employer’s contractual ban on class and collective actions violates workers’ rights to engage in concerted activities under Section 7 of the National Labor Relations Act (NLRA) and constitutes an unfair labor practice. Section 7 of the NLRA provides that employees have the right “to engage in… concerted activities for the purposes of… mutual aid and protection.” 29 U.S.C. § 157. The NLRB, which has primary jurisdiction over enforcement of the NLRA, has recognized that by filing a class or collective action on behalf of similarly situated co-workers, an employee is engaging in protected activity under Section 7. If an employer’s policy unduly interferes with its employees’ Section 7 rights, that policy constitutes an unfair labor practice in violation of Section 8(a)(1) of the NLRA. 29 U.S.C. § 158(a)(1). This case arises out of unfair labor practice charges filed by Michael Cuda, an employee of a company engaged in the business of building and selling homes nationwide known as D. R. Horton, Inc. As a matter of company policy, D.R. Horton required each new and current employee to sign an arbitration agreement covering all workplace-related claims and containing a class and collective action ban.
NELA and Public Justice, along with The Employee Rights Advocacy Institute For Law & Policy (The Institute) and 25 other organizations, submitted an amicus brief to urge the NLRB to hold that an employer’s imposition of a contractual term prohibiting its employees from pursuing workplace-related claims by way of a joint, class, or collective action in any forum – whether in court or in arbitration – violates section 7 and section 8(a)(1) of the NLRA. Our brief argues that D.R. Horton’s “Mutual Arbitration Agreement” strips its workers of their well-established rights under section 7 of the NLRA to bring joint, collective, and class legal actions for their mutual aid and protection. An employer’s requirement that its employees prospectively waive their rights to engage in concerted legal activity about their conditions of employment is as much a violation of section 8(a)(1) as a “yellow dog contract” prohibiting unionization altogether. We further argue that the Federal Arbitration Act of 1925 (“FAA”) does not save D.R. Horton’s blatant violation of the NLRA simply because the instrument of the illegality is an arbitration agreement. The United States Supreme Court has repeatedly held that an arbitration agreement that deprives employees of their substantive federal statutory rights is unenforceable. Because D.R. Horton’s so-called “Mutual Arbitration Agreement” deprives its employees of their substantive rights under section 7 of the NLRA to engage in concerted legal action, the FAA does not spare it from invalidation under section 8(a)(1).
Author: Michael C. Subit (WA)