NLRB Scuttles Arbitration by Individuals Only

Posted on Jan 10, 2012

A recent U.S. Supreme Court decision held that the Federal Arbitration Act allowed for a waiver of class action claims. So, plaintiffs would have to bring their claims one at a time. The case essentially was a claim by phone services customers for over charges.

Last week the NLRB ruled that having a similar provision in an employment arbitration agreement violated employees’ rights to engage in “concerted activity”. The core of the decision is that the right to bring claims “in concert” is a substantive right under the NLRA. Therefore, an arbitration agreement that waived that right, violates the NLRA and is not enforceable. The NLRB left open the potential that such a provision would be lawful if reached by a union in a properly negotiated collective bargaining agreement.