Practical Law Expert Q&A on Class Action Waivers in Employment Agreements with D.R. Horton’s Lead Counsel

January 9, 2014

Practical Law company logoIn D.R. Horton, Inc. v. NLRB (December, 2013), the U.S. Court of Appeals for the Fifth Circuit, in a 2-1 decision, rejected the National Labor Relations Board’s (Board) conclusion that the employer violated the National Labor Relations Act (NLRA) by requiring an employee to sign an arbitration agreement waiving the employee’s rights to pursue class or collective actions. The Fifth Circuit found that the NLRA, which protects employees’ rights to engage in certain concerted activities, does not create a substantive right for employees to use class or collective actions to resolve disputes with their employers. The court also found, among other things, that the Board did not give proper weight to the Federal Arbitration Act (FAA). However, the court enforced the Board’s order that the company revise the arbitration agreement, so that employees would understand that they were not waiving their rights to file unfair labor practice (ULP) charges with the NLRB.

The decision will most significantly impact employers in Texas, Louisiana and Mississippi, who can be more confident that they will be able to enforce employee arbitration agreements that include class action waivers in the Fifth Circuit. However, employers in all federal circuits may consider using this potentially persuasive circuit court precedent to support their:

  • Decisions to draft employee arbitration agreements that include class action waivers.
  • Efforts to enforce these types of agreements in federal court.
  • Efforts to challenge federal agencies’ interpreting other statutes as yielding to their own.

In the Practical Law Expert Q&A article linked below, Ogletree Deakins shareholder and lead counsel for D.R. Horton in this case, Ron Chapman, discusses why class action waivers in employment agreements are popular, the implications of the Fifth Circuit’s decision and the Board’s potential responses to the decision.

To read the full Expert Q&A, see: http://us.practicallaw.com/8-552-0925.