Tag Archives: Inc.

Pro-Union NLRB Contradicts U.S. Supreme Court: Declares Employee Class-Action Waivers Violate Labor Law

Contributed by Jeff Risch

On January 3, 2012, the NLRB held that a nationwide home builder committed an unfair labor practice under the National Labor Relations Act (NLRA) by implementing a mandatory arbitration agreement that waived the rights of employees to participate in class or collective actions (D.R. Horton Inc. and Michael Cuda, 357 NLRB 184, 1/3/11). In short, the NLRB held that employers may not compel employees to waive their right to collectively pursue litigation of employment claims in all forums, arbital and judicial.

Michael Cuda, a superintendent for Horton, claimed that he and other similar superintendents for the company were prevented from pursuing a wage and hour class-action/collective-action under the Fair Labor Standards Act (FLSA); alleging that they were misclassified as exempt employees.  Horton required Cuda and other employees to execute an arbitration agreement whereby they individually agreed to forego class-action relief of all types relating to any employee dispute.  NLRB Chairman Mark Gaston Pearce (D) and Member Craig Becker (D) found that this mandatory arbitration procedure violated Section 8(a)(1) of the NLRA because it interfered with the statutory right of employees to engage in “protected concerted activity for their mutual benefit.”

In so holding, the NLRB took issue with the U.S. Supreme Court’s recent decision in AT&T Mobility LLC v. Concepcion, U.S., No. 09-893, 4/27/11.  In Concepcion, the court, in a 5-4 decision, enforced AT&T’s customer cellular telephone contract that provided for mandatory arbitration on an individual basis and prohibited class action proceedings despite conflicting California state law.  The court essentially held that the Federal Arbitration Act (FAA) preempts state laws that prohibit contracts from preventing class-action lawsuits.  In judicial decisions that have since followed Concepcion, courts throughout the U.S. have concluded that employees may waive class-action rights by agreeing to individualized arbitration through employment arbitration agreements.  

In distinguishing Concepcion, the NLRB held that employment arbitration agreements (unlike consumer contracts) cannot prevent employees from waiving their rights protected by the NLRA (i.e. collectively pursue wage/hour claims and/or disputes over terms and conditions of employment). The NLRB also reasoned that Concepcion involved a conflict between the FAA and a California state law, which implicated the U.S. Constitution’s Supremacy Clause; whereas in D.R. Horton the Supremacy Clause was not called into question as the issues involved purely federal statutes (FAA vs. the NLRA).

$3.2 Million Jewel-Osco ADA Settlement Provides Important Reminder About Disability Leave Policies

Earlier this year Jewel-Osco agreed to pay $3.2 million and to be subject to extensive remedial relief to resolve the lawsuit the EEOC filed against Supervalu, Inc. (Jewel-Osco’s parent company) alleging the grocery store had a policy and practice of discriminating against employees with disabilities.  According to the EEOC, Jewel-Osco had a written policy and practice of terminating disabled employees if they could not return to work after a year. 

The problem with Jewel-Osco’s policy and practice is that no consideration was given as to whether the employees could return to work if given a reasonable accommodation.  Allegedly, Jewel-Osco effectively communicated that disabled employees must be 100% healed to return to work, which is patently unlawful under the Americans with Disabilities Act (ADA).  In addition to the monetary settlement, Jewel-Osco agreed to revamp its employment policies, conduct training sessions with respect to the issue of making reasonable accommodations, and track and report its progress to the EEOC.

Importantly, the Jewel-Osco settlement comes less than one year after the $6.2 million settlement involving Sears Roebuck & Co., where Sears maintained a leave policy that terminated disabled workers after they exhausted workers’ compensation rights without conducting an individual assessment to determine if a reasonable accommodation would allow the employee to return to work. 

These cases serve a critical reminder that engaging in the “interactive process” with employees to identify the possibility of offering a good faith reasonable accommodation is a mandatory step — a step that must be included in an employer’s disability leave policy or practices.  The bottom line is that employers should undertake an immediate review of its leave policies and practices to ensure it does not become the EEOC’s next target.