How to Avoid Signing a Mandatory Employment Agreement

You might want to wait before signing that mandatory employment agreement.

You may remember that in April 2011, the U.S. Supreme Court decided the Concepcion case which received a huge amount of press coverage. As a result of that decision, companies are using arbitration clauses in consumer agreements to block consumers from bringing class action arbitrations. Many people have feared attempts to apply the Concepcion decision to other areas of the law, particularly employment law.  

In January 2011, an administrative law judge (“ALJ”) decided that it was not unlawful for a company named D.R. Horton, Inc. to require its employees, as a condition of employment, to sign an arbitration agreement in which they agreed to submit their employment disputes to individual arbitration. The agreement also provides that the arbitrator will not have any authority to consolidate the claims or treat them as class or collective actions.  In other words, in the event of a dispute with their employer, those employees cannot bring an employment  collective or class action in a court or in an arbitration. So much for the rights of the little guy.

Fortunately, that isn’t the end of the story. In June 2011, the National Labor Relations Board (“NLRB”) (an independent federal agency) who will review the ALJ’s decision, invited those interested to file amicus (“friend of the court”) briefs to address the question whether D.R. Horton, Inc.’s arbitration agreement violated the National Labor Relations Act (NLRA). That’s very important because, under the NLRA, workers have the right to bring joint, collective and class actions. Even though the NLRB didn’t say so in its invitation for briefs, it is believed that the NLRB is interested in how the Concepcion decision will impact the D.H. Horton, Inc. decision.

An amicus brief filed by 27 organizations that represent the interests of workers across the country argued, very convincingly, that Concepcion does not affect employees’ rights under the NLRA because the NLRA gives employees the statutory right to engage in concerted legal activity(meaning they can join together) for their mutual aid and protection-rights that the Concepcion consumers did not have.  Agreeing with the ALJ could mean the NLRB would be changing many years of law aimed at ensuring the rights of employees to act as a group.

We will be watching out for the NLRB’s decision and report on the outcome. You can read what we had to say about legislation that will prevent mandatory arbitration in employment, consumer and civil rights cases here.

Abbey Spanier, LLP is located in New York City, is a well recognized national class action and complex litigation law firm.