NLRB Strikes Down Mandatory Class Action Waivers
The NLRB denied that its ruling conflicted with the Federal Arbitration Act ("FAA"), as the right to file a class action claim under the NLRA is substantive and "the intent of the FAA was to leave substantive rights undisturbed." Nor did the Board see any incompatibility with the United States Supreme Court's recent decision, in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), that a California law prohibiting class action waivers in consumer arbitration contracts was preempted by the FAA. The critical distinctions, according to the NLRB, are that AT&T Mobility did not involve class action waivers in the employment context, and turned on a conflict between the FAA and state law, whereas the NLRA and FAA are both federal laws.
While the decision is certainly troubling, employers can take some comfort in the fact that the NLRB itself acknowledged the limitations of its decision. Specifically, the NLRB stated that: (1) the decision applies only to non-managerial employees; (2) the ruling does not mandate that class actions proceed in court as opposed to in arbitration, nor does it bar agreements mandating arbitration of individual employee claims; rather, (3) a mandatory arbitration provision simply had to leave open the option of either a judicial or arbitral forum to raise class action claims by the employee; and (4) the ruling also leaves unaffected class action waivers entered into between a union and an employer as part of a collective bargaining process.
Given the apparent tension between this decision and the Supreme Court's decision in AT&T Mobility, the NLRB is not likely to have the last word on this issue. Instead, the United States Supreme Court may well have the final say. For the time being, though, employers would be well advised to consult with counsel before seeking to enforce any class action waiver provisions already executed by employees or required as a condition of employment. We will continue to monitor this situation and provide updates as developments warrant.