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NLRB delivers important ruling affecting arbitration agreements

In recent years, an increasing number of companies have started requiring new hires to sign employment agreements in which they agree to settle all work-related complaints through arbitration rather than litigation. This means that they must agree to work out disputes with an arbitrator rather than pursue a lawsuit.

Many agreements also stipulate that employees must pursue claims individually and not as a group. For employees in Florida and elsewhere, these employment agreements often make it difficult or impossible to pursue claims related to everything from sexual harassment to wage and hour violations as a group, even if the problem exists company-wide.

Thanks to a recent ruling by the National Labor Relations Board (NLRB), such employment agreements have essentially been banned. The NLRB ruled that arbitration agreements barring group claims conflict with the National Labor Relations Act of 1935, which protects the rights of workers to engage in concerted action.

The ruling will apply to a broad range of non-management workers in the private sector, and does not differentiate between union and non-union employees. A professor, who is an expert on mandatory arbitration agreements, recently noted that more than 25 percent of non-union employees have signed one.

He added that, "This is a big deal. Mandatory arbitration agreements are so widespread, and this would suggest that many of them violate labor law by barring class actions."

Many expect the ruling to be appealed. If so, it will be brought before a federal court of appeals. Hopefully, this important ruling will withstand scrutiny and be properly recognized as a fair and just protection of employee rights.

Source: PostBulletin.com, "NLRB backs workers on joint arbitration cases," Steven Greenhouse, Jan. 9, 2012

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