Public Interest Coalition Asks National Labor Relations Board to Declare Workplace Class Action Bans An Unfair Labor Practice

 

By Victoria Ni, Public Justice Senior Attorney
 
Twenty-seven organizations dedicated to representing poor and powerless individuals nationwide and led by Public Justice and the National Employment Lawyers Association have come together on one amici curiae brief to urge the National Labor Relations Board (the “Board”) to hold that a class or collective action ban in the workplace violates workers’ rights to engage in “concerted activities” under the National Labor Relations Act (“NLRA”) and constitutes an unfair labor practice (“ULP”).  Section 7 of the NLRA protects all forms of concerted activity by employees – including class and collective actions -- to improve wages or working conditions.  Its reach extends to most employees in the private sector, both union and non-union.  If the Board agrees that the imposition of a workplace class and collective action ban constitutes a ULP, then almost anyone could file a ULP charge with the Board against most private employers who tried to enforce such a ban within the preceding six months.
 
In the wake of AT&T Mobility v. Concepcion, companies large and small are considering whether they, too, should force their employees to sign an arbitration clause containing a class action ban.  That decision in April, from a bare majority of the U.S. Supreme Court, said the Federal Arbitration Act preempted a state law rule that would have found a class action ban in a consumer contract unconscionable.  Some would say (though we would not) that most workplace class action bans are protected from challenge under the decision’s rationale.  But now, employers wanting to implement class action bans must consider another risk: that class action bans in the workplace may be found to run afoul of the NLRA.
 
The issue of whether a class or collective action ban in the workplace violates the NLRA 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.  D.R. Horton, Inc., NLRB Case No. 12-CA-25764.  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:  

The arbitrator will not have the authority to consolidate the claims of other employees into a proceeding originally filed by either the Company or the Employee.  The arbitrator may hear only Employee’s individual claims and does not have the  authority to fashion a proceeding as a class or collective action or to award relief to a group or class of employees in one arbitration proceeding.

In February 2010, Cuda filed a demand for arbitration with D.R. Horton, seeking certification of a collective action on behalf of himself and all similarly situated employees who had been misclassified as “exempt” employees and wrongfully denied overtime pay under the Fair Labor Standards Act.  D.R. Horton refused to arbitrate the workers’ claims collectively.  Cuda then filed a ULP charge with the Board, and the Board’s Miami Regional Office, in turn, issued a Complaint against D.R. Horton.
 
On January 3, 2011, Administrative Law Judge (“ALJ”) William N. Cates confirmed that the filing of a class action lawsuit constituted protected activity under the NLRA.  However, due to the absence of “direct Board precedent,” he refused to find that D.R. Horton’s class and collective action ban violated the NLRA.  The judge appeared to be heavily influenced by recent Supreme Court decisions “reflect[ing] a strong sentiment favoring arbitration.”  The ALJ’s decision is subject to review by the Board, which invited public comment.
 
The amici brief filed with the Board on July 27, 2011, was on behalf of groups representing some of the most vulnerable and exploited low-wage and immigrant worker populations in this country, such as workers in the building maintenance, car wash, construction, landscaping, food processing, food service, hospitality, light manufacturing, warehousing and shipping, child care, and nursing home industries.  The workers represented by amici regularly confront poor working conditions, wage and hour violations, civil rights violations, as well as retaliation for asserting their rights, but they lack the financial and legal resources necessary to enforce their rights through individual lawsuits.  For them, a class or collective action is often the only way to seek redress under broad, remedial statutes intended to protect workers. 
 
The brief argued that class and collective action bans interfere with a worker’s core NLRA right to join together, and were no more enforceable than a “yellow dog contract” prohibiting unionization altogether.  In addition, the brief explained that the Supreme Court’s recent decision in Concepcion did not overrule clear Supreme Court precedent allowing plaintiffs to resist terms in arbitration clauses on the ground that they interfere with the effective vindication of statutory rights, such as those under the NLRA. 
 
Notwithstanding the Supreme Court’s seeming endorsement of class action bans in Concepcion, D.R. Horton presents an opportunity to protect the vast majority of U.S. workers from class and collective action bans that stifle, if not eliminate, their ability to vindicate workplace rights. 

About the Author

Victoria W. Ni is a Senior Attorney in the Oakland, CA office of Public Justice. She has served as counsel in a wide variety of precedent-setting cases, with a particular emphasis on employment and civil rights issues.  Victoria assisted on the brief in D.R. Horton.