NLRB RULES CLASS ARBITRATION AGREEMENTS ARE ILLEGAL

In a monumental decision, the NLRB has ruled that forcing employees to sign class-action waivers is illegal. In this case, the employer, DR Horton, forced employees to sign arbitration agreements stating they could bring individual claims, not class action claims in arbitration. The employee wanted to file a collective action under the FLSA to recover unpaid overtime. The decision is significant because the Fair Labor Standards Act allows employees to bring a case on behalf of themselves and all others who are similarly situated to vindicate their rights for non-payment of minimum wages and overtime. This collective action provision allows employees to hire attorneys to pursue their case on a contingency fee, in order to assist the employee and all others who with to join the suit. Employers favor individual claims, rather than class actions, knowing that the time and expense would be too great for lawyers to take these cases. As a result of this decision, which will likely be appealed, employees can bring class actions, even if their arbitration agreement contained a class waiver.