NLRB Continues Attack on Class and Collective Action Waivers

The National Labor Relations Board (“NLRB”) has ruled that an employer, Samsung Electronics, violated the National Labor Relations Act (“NLRA”) by requiring workers to waive their right to engage in collective action over employment-related claims in both arbitral and judicial forums as a condition of employment.  In Samsung Electronics America, Inc. f/k/a Samsung Telecommunications America, LLC, No. 363 NLRB No. 105 (February 3, 2016), a field sales manager for Samsung, Franks, signed a Mutual Agreement to Arbitrate Claims prior to beginning her employment.

Later, Franks discussed compensation rates with other company employees.  In addition, Franks allegedly invited other employees to join her in a class action lawsuit against Samsung. In response to her discussion with coworkers, Franks received a call from a Samsung human resources representative.  The representative informed Franks that she received a complaint from another worker regarding Franks’ proposed lawsuit conversations.  The representative also apparently told Franks to come to human resources with any wage and hour concerns in the future and leave her fellow employees out of it.

Next, Franks and other Samsung employees filed a class action lawsuit against their employer alleging violations of the Fair Labor Standards Act.  Samsung responded to the Florida lawsuit by filing a motion to dismiss the case and compel the dispute to arbitration. Franks then filed an unfair labor practices charge against Samsung alleging the compulsory class waiver “interfered with, restrained and coerced employees in the exercise of their Section 7 rights, in violation of Section 8(a)(1)” of the NLRA.

Last August, an Administrative Law Judge (“ALJ”) ordered Samsung to cease and desist from “[m]aintaining and/or enforcing a mandatory arbitration agreement that requires employees, as a condition of employment, to waive the right to maintain class or collective actions in all forums, whether arbitral or judicial,” and notify all workers that the Mutual Agreement to Arbitrate Claims was rescinded or revised.  The judge also ordered Samsung to refrain from telling workers “not to discuss their lawsuits with other employees,” and “interfering with, restraining, or coercing employees in the exercise of the rights guaranteed to them by Section 7 of the Act.”

In February, a three-member NLRB panel reviewed the ALJ’s decision.  The Board affirmed the judge’s order with regard to the Mutual Agreement to Arbitrate Claims and ordered Samsung to refrain from:

(a) Coercively interrogating employees about their protected concerted activities.

(b) Maintaining and/or enforcing a “Mutual Agreement to Arbitrate Claims” (the Agreement) that requires employees, as a condition of employment, to waive the right to maintain class or collective actions in all forums, whether arbitral or judicial.

(c) In any like or related manner interfering with, restraining, or coercing employees in the exercise of the rights guaranteed them by Section 7 of the Act.

The NLRB also ordered the company to rescind or revise the Mutual Agreement to Arbitrate Claims and provide all Samsung workers with written notice regarding the change.

Less than two weeks later, Samsung filed a petition for review of the Board’s order with the United States Court of Appeals for the Fifth Circuit.  Like numerous other employers who have sought similar appellate review in recent months, Samsung argued in its petition that the NLRB’s decision was contrary to law.

Stay tuned to Disputing for more on the NLRB’s apparent war against collective and class action waivers included in employment agreements.

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