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NLRB Rules Against D.R. Horton: Employees May Join Class Action Lawsuit

In what may be a critical landmark in the struggle for employee rights, the National Labor Relations Board (NLRB) heard a case involving an arbitration agreement requiring employees of a homebuilder to agree to give up their right to join in a class action suit and deemed it an unfair labor practice. The decision comes as a surprise to some, in light of last year’s Supreme Court ruling in AT&T Mobility v. Concepcion that struck down a California rule blocking class action waivers.

Class%20Action%20Gavel.jpgThe case, D.R. Horton, Inc. and Michael Cuda, was initiated by Cuda, a superintendent at D.R. Horton, who had tried to initiate class action arbitration on his own behalf and that of other superintendents who worked for the builder.

The NLRB ruled that class action waivers have no place in the workplace and employers who make them a condition of employment are engaging in an unfair labor practice. The decision read, in part, “Clearly, an individual who files a class or collective action regarding wages, hours, or working conditions, whether in court or before an arbitrator, seeks to initiate or induce group action and is engaged in conduct protected by Section 7…Such conduct is not peripheral but central to the act’s purposes.”

The current case had been likened to the case involving AT&T Mobility, with many predicting that the previous case would influence the NLRB’s ruling in the current case. However, the NLRB stated that the AT&T case was about consumer class action suits and had no relevance to D.R. Horton, which the NLRB considered a case about workplace rights that employees are entitled to by the National Labor Relations Act. “Furthermore, AT&T Mobility involved a conflict between the FAA and state law, which is governed by the Supremacy Clause, whereas the present case involves the argument that two federal statutes conflict,” according to the ruling.

The decision is expected to be reviewed by the U.S. Court of Appeals.