The National Labor Relations Board has ruled that it is a violation of federal labor law to require employees to sign arbitration agreements that prevent them from joining together to pursue employment-related legal claims in any forum, whether in arbitration or in court.
The case examined an agreement under which employees waived their right to a judicial forum and agreed to bring all claims to an arbitrator on an individual basis. The agreement prohibited the arbitrator from consolidating claims, fashioning a class or collective action, or awarding relief to a group or class of employees
The Board found that the agreement unlawfully barred employees from engaging in “concerted activity” protected by the National Labor Relations Act. The Board emphasized that the ruling does not require class arbitration as long as the agreement leaves open a judicial forum for group claims.
Employers may not prohibit class or collective actions in a judicial forum, but may require that arbitrations proceed only 0n an individual basis. Employers that use the kind of class action waivers that the NLRB found unacceptable should consider revising or withdrawing them.