National Labor Relations Board

On April 3, 2017, a federal district court in New Jersey rejected the National Labor Relation Board’s (“NLRB”) D.R. Horton and Murphy Oil holdings and upheld employee waivers of class and collective arbitration. In dismissing wage and overtime claims brought by an employee of Chili’s Grill & Bar, District Judge Noel Hillman ruled that such mandatory arbitration agreements do not violate the National Labor Relations Act. Cicero v. Quality Dining, Inc., et al, 1:16-cv-05806 (April 3, 2017).

Judge Hillman noted the issue was pending before the U.S. Supreme Court, and that the Third Circuit had yet to rule on the issue. However, he also noted a related action, Joseph v. Quality Dining, in the Eastern District of Pennsylvania and a similar case decided by another federal district judge in New Jersey in Kobren v. A-1 Limousine Inc., both of which also rejected the NLRB’s position.

The NLRB has acquiesced in employers requiring employees to waive court action and agree to submit to arbitration wage and overtime and other employment related claims. However the Board has insisted that employees may not be required to arbitrate each employee’s claims separately, in individual arbitration. This, the Board contends, interferes with employees’ rights to participate in concerted activities for their mutual aid and benefit, otherwise protected under Sections 7 and 8 (a) (1) of the NLRA. In making this argument, commentators point out that the Board appears to be neglecting the second part of Section 7 which expressly reserves to employees the right to refrain from participating in any and all concerted activity.   NLRB opponents contend that waivers of class and collective arbitration are an exercise of that right.

The Supreme Court will hear arguments in the Fall in Murphy Oil and consolidated cases as to whether the NLRA prohibits an employer from requiring employees to agree to waive their rights to arbitrate employment disputes on a class or collective basis, or whether the Federal Arbitration Act favoring arbitration controls. Conservative Judge Neil Gorsuch of the Tenth Circuit has recently been sworn in as a Justice of the United States Supreme Court and will take the seat of Justice Scalia, who passed away a year ago. It remains to be seen how the Court will rule on this very important employment law issue.