One of the hot issues in the courts is whether an employer can require its employees to sign an arbitration agreement which waives the right to bring a class or collective action. Obviously, such agreements, if valid, would be a game changer in fighting back against the increasing tide of wage and hour litigation. Even if an employer is not a big fan of arbitration generally, one would presumably be able to tailor a limited arbitration agreement for wage and hour claims, which would effectively eliminate the risk of class actions in this area.
In the Fifth Circuit Court of Appeals, the case to watch is DR Horton, where the homebuilder is appealing an NLRB decision finding that such waivers violate the National Labor Relations Act. The homebuilder filed its opening brief last week arguing that the NLRA only protects employee rights to collectively assert legal rights in bargaining and not a non-waivable right to invoke class procedures in the adjudication of those claims under other statutes. Basically, the argument is that the NLRB overstepped its authority in attempting to regulate the procedures for how employees pursue claims under completely unrelated statutes. If DR Horton prevails in this case, it will remove one of the last remaining hurdles in enforcing class action waivers, as the Supreme Court has already ruled that such waivers are allowed under the Federal Arbitration Act (Concepcion v. AT&T Mobility LLC, 131 S.Ct 740 (2011)), which trumps state law.
On a related note, a California appeals court (not the most employer friendly of jurisdictions), ruled last week that class action waivers are valid and that California precedent contrary to the Concepcion ruling had been overruled by the Supreme Court. See Iskanian v. CLS Transportation. The California court likewise rebuffed the NLRB's controversial DR Horton decision (noted above) and had no trouble finding that the waiver was lawful and not in violation of public policy. Obviously, this case will be appealed to the California Supreme Court, but it is a good sign that these types of waivers just might be the solution that employers have been looking for in this area.
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