In a landmark decision certain to have far reaching implications in the private sector, the National Labor Relations Board (henceforth, NLRB) ruled last week in D.R. Horton, Inc. and Michael Cuda that employers may not prohibit workers from filing work-related class actions. The decision essentially invalidates any employment agreement which would require workers to pursue claims individually through arbitration. Prior to the labor board’s findings, these sorts of agreements were some of the most widely administered by companies across the United States. However, by the NLRB’s determination, a federal law protecting workers’ rights to engage in group action surmounts a company arbitration agreement preventing workers from bringing claims collectively. According to the New York Times, the NLRB’s conclusion will “no doubt anger many companies.”
Morgan and Morgan is pleased to report that it had a role in the development of this ground-breaking decision. The firm was first contacted by Michael Cuda, who looked to file a nationwide wage and hour class action on part of all superintendents working with the company for unpaid overtime, among other damages. In response to Cuda’s attempt at legal action, D.R. Horton demanded enforcement of the arbitration agreement and its condition that claims be litigated only on an individual basis. Cuda then filed an unfair practice charge claiming the company was in violation of the employees’ Section 7 rights to engage in mutual aid or protection when it enforced the employment agreement.
While the presiding Administrative Law Judge William N. Cates confirmed that the filing of class action lawsuits was protected under the NLRA, he refused to find D.R. Horton’s mandatory waiver of collective action in violation of the NLRA. Reportedly, the judge appeared to be influenced by recent Supreme Court decisions in California that reflect “strong sentiment favoring arbitration.”
Following the verdict, the National Employment Lawyers Association, Public Justice and several other organizations working for the people not the corporations, alongside Morgan and Morgan, came forward with an amici curiae brief imploring the NLRB to determine unequivocally that a prohibition on workplace class action suits is a breach of workers’ rights as expressed in Section 7 of the National Labor Relations Act.
Notwithstanding the findings of the California Supreme Court and Judge Cates’ reticence, the NLRB reviewed the Cuda case and concluded that employment agreements requiring individual arbitration did indeed violate provisions of the National Labor Relations Act, namely Section 7.