In its decision in AT&T Mobility v. Concepcion last year, the U.S. Supreme Court concluded that a mandatory arbitration agreement could include provisions barring the arbitrator from hearing class action claims. Concepcion involved a commercial arbitration agreement, but employment experts read the decision to equally apply to class and collective action bars in mandatory arbitration agreements between employers and employees.

On January 3, the National Labor Relations Board challenged this understanding, concluding that the National Labor Relations Act prohibits employers from requiring waiver of such class action arbitration rights. In D.R. Horton, Inc., the NLRB answered two legal questions about class and collective action arbitrations. First, it concluded that Section 8(a)(1) of the NLRA precludes employers from restricting collective attempts by employees to pursue these rights.

The NLRB stated that this provision of the NLRA supersedes the Federal Arbitration Act. It also concluded that Concepcion did not involve labor rights, and is distinguishable from these circumstances. This decision applies to all employees covered under the NLRA, whether the workplace is unionized or not. It would have no effect on supervisors or other workers not subject to Section 8(a)(1)'s protections.

In the second part of the opinion, the NLRB stated that mandatory arbitration agreements cannot be written to appear to preclude employees from filing complaints with the NLRB regarding their treatment. While this part of the decision is not particularly controversial, employers with arbitration agreements should review them to make certain they do not give the impression that they prohibit employees from complaining to government agencies.

Employers are certain to legally challenge the first part of the NLRB's decision. If the arbitration agreement allows employees to pursue claims and to recover any damages allowed under law, the restriction to individual arbitration can be considered a procedural and not a substantive limitation of employee rights.