An employee for a major homebuilder believed he was improperly denied overtime pay because he and other employees were misclassified as supervisors. He wanted to join with the others to file a collective claim with an arbitrator. But the builder said its arbitration policy, which employees were required to sign, only allowed for individual claims. The Board found that the policy was unlawful because it denied the employees their right to engage in concerted activity by filing jointly.
Michael Cuda worked as a "superintendent" for D.R. Horton, Inc., a builder with operations in 20 states. Like a growing number of employers, Horton required workers to agree in writing to submit any future claims against it to a professional arbitrator outside the court system. The Horton agreement had an additional condition, that claims could only be made on an individual basis. Cuda signed the agreement in 2006.
Two years later, Cuda notified Horton that he planned to seek arbitration on the job classification issue on behalf of himself and all other superintendents. The company rejected the idea, citing its arbitration policy. Cuda then filed an Unfair Labor Practice charge with the NLRB, claiming Horton's policy violated the labor law's protection of joint activity. Following an investigation, the regional director issued a complaint on behalf of the NLRB General Counsel, which brought the case to a hearing before an administrative law judge. In January 2011, the judge ruled that the arbitration policy was unlawful in that it deprived employees of the right to file charges with the NLRB.
That decision was appealed to the Board, and the case drew significant interest from groups representing employees and employers, a dozen of which filed amicus briefs with the Board. (All briefs and other public documents are available through this case page.
In January 2012, a two-member majority of the then three-member Board ruled in favor of Cuda, finding the policy was unlawful not only because it precluded NLRB charges but also because it precluded joint claims of any kind. The decision, which requires Horton to rescind or revise the agreement, discussed at length the relationship between federal labor law and the Federal Arbitration Act of 1925. The Board also emphasized that the ruling does not require class arbitration as long as the agreement leaves open a judicial forum for group claims.
The Board decision has been appealed to the U.S. Court of Appeals for the Fifth Circuit in New Orleans, LA.
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