Employment Agreements for Individual Arbitration Unenforceable
By: Melonie L.M. Stothers6/1/2017Last Friday, May 26, 2017, the Sixth Circuit published a new opinion, NLRB v Alternative Entertainment, Inc., No 16-1385 (“AEI”), holding that the National Labor Relations Act (29 U.S.C. §§ 151 et seq., “NLRA”) provides workers with a substantive right to concerted activity, including collective or joint legal actions. As a result, employer agreements that purport to prevent class actions or other joint lawsuits (whether in arbitration, the courts, or other tribunals) are not enforceable where the NLRA applies.With this AEI decision, the Sixth Circuit follows the Seventh and Ninth Circuit and splits with the Fifth Circuit, which enforces employment arbitration agreements where employees agree to waive their right to collective or joint actions. In AEI, the Sixth Circuit did not hold that employers could not force joint actions into arbitration (presuming arbitration could be enforced). The Court simply held that an employer cannot contract away its employees’ right to bring a collective or joint action.
Employers who have employment agreements that purport to exclude collective or joint actions (typically part of an arbitration agreement) should obtain a legal review of your employee agreements, applications, and policy manuals to help prevent your company from falling victim to these and other changes in the law.
Barris, Sott, Denn & Driker has a concentrated practice in employment law, among other areas of business law and litigation. For more information, please contact Melonie Stothers at (313) 965-9725.