SHRM-Atlanta

Within the last three months, a number of court decisions, agency rulings, and new regulations have generated confusion regarding arbitration agreements and policies.  Until recently, one of the benefits of arbitration was the possibility of avoiding class and collective actions.  Given recent rulings, that might not be a viable strategy anymore.

The pendulum began swinging in April 2011 with the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 563 U.S. ____ (2011).  That case upheld an arbitration agreement with cell phone customers that required individual—not class—arbitration.  The pendulum swung even further in December 2011 when FINRA expanded its rules prohibiting class actions to also prohibit collective actions.

But the pendulum swung back the other way when the NLRB ruled in D.R. Horton, Inc., 357 NLRB No. 184, that it would be an unfair labor practice to deny employees the right to bring or participate in class or collective actions in any forum.  The NLRB started with the proposition that filing and joining class and collective actions is a protected, concerted activity under section 7 of the NLRA.  Then, the NLRB noted that the company’s mandatory arbitration program worked in conjunction with a class action waiver to deny any forum to employees for their class or collective actions—they could not go to court because there was mandatory arbitration, and they could not go to arbitration because there was a class action waiver.  The NLRB suggested that if employees were not put between this rock and hard place, no unfair labor practice would have occurred.

The pendulum swung back towards employers on in late January 2012 when the Central District of California upheld a class action waiver contained in an employment agreement in Johnmohammadi v. Bloomingdales, Inc.  In that case, the Court found it important that the employee had voluntarily agreed to the class action waiver in arbitration, and it was not a condition of employment.  Perhaps if the arbitration agreement containing a class action waiver had been a condition of employment, the Johnmohammadi case would have come out differently.

In any event, employers are left with little to go on in designing an arbitration program or evaluating one that already exists.  On the one hand, the Supreme Court has endorsed arbitration—even where class or collective actions are waived.  On the other hand, the NLRB has taken the position that employees must always have a forum (judicial or arbitral) for their class or collective claims.

Until the law is settled, employers should proceed with caution when drafting arbitration agreements or policies.  Express class-action waivers should not be used in employment agreements or employee handbooks in light of D.R. Horton.  Current arbitration programs that contain class or collective action waivers should be amended to avoid unfair labor practice charges.  Is it time to review your current arbitration program, or to draft arbitration agreements with your employees?

You can see Peter Hall’s session with David Long-Daniels, Information Privacy and Security — Working Remotely, Social Networking, Employee Monitoring and How to Avoid or Manage the Lawsuit That’s Coming, at the 22nd Annual SHRM-Atlanta HR Conference at the Cobb Galleria Centre in Atlanta, March 13-14th, 2012.

Peter Hall is an associate with Greenberg Traurig, LLP in Atlanta.  He focuses his practice on labor and employment law with an emphasis on litigation matters. He counsels both large and small employers on a variety of labor and employment issues, including avoidance of discrimination and retaliation claims, compliance with disability and medical leave requirements, wage and hour issues, employee termination, restrictive covenants, union avoidance, and elections and records retention. Peter has counseled and defended employers before state administrative agencies in Georgia and other states as well as before federal agencies, including the EEOC and the DOL. He frequently drafts employment, restrictive covenant and separation agreements, and has experience drafting and reviewing multistate and multinational employee handbooks.

Peter obtained his J.D. from Vanderbilt University Law School in 2004 and his Bachelor of Arts, summa cum laude, from The Ohio State University in 2001.  He is listed as a “Rising Star” in Georgia Super Lawyers magazine, 2012.