U.S. Fifth Circuit - The FindLaw 5th Circuit Court of Appeals Opinion Summaries Blog

Mandatory Arbitration Agreements for Employees OK, 5th Cir. Rules

The National Labor Relations Board has been a thorn in the Fifth Circuit's said these past few years. Several days ago, however, the panel court made it perfectly clear that it hadn't changed its mind with regards to the proper scope of the National Labor Standards Act.

The issue at bar (now apparently settled) is whether or not employers can require the signing of mandatory arbitration clauses that preclude employee lawsuits against the company. The answer? Such clauses are allowed.

Where to Begin?

The original case began several years ago with D.R. Horton. There, the NLRB argued that the general provisions and legislative intent behind the National Labor Relations Act included doggedly defending the rights of employees to organize and sue, even if said employees had signed a mandatory arbitration agreement as a condition of their hiring. NLRB argued, in essence, that the signing of these agreements was a direct violation of the Act.

The Court Has Spoken

In a 3-2 decision, the 5th Circuit ruled against NLRB. Instead, the Court was persuaded that the language of the Federal Arbitration Act essentially trumped the NLRB because it specifically urged the application of arbitration agreements "as written."

Here We Go Again

Fast forward to Murphy Oil. Under facts substantially similar to Horton, the plaintiffs this time brought a collective FLSA action against the employer in court. When the Murphy Oil moved to dismiss, the court granted.

Not to be discouraged, the plaintiff's brought their case to the NLRB and decided to go for broke. Thus, they were poking the Fifth Circuit in the eye again over a legal issue which that court had settled only a few years earlier.

NLRB seemed to snub the decision of the Fifth Circuit when it declared that its original "reasoning and result" in Horton was correct -- even conceding that the Fifth, Eight and Second Circuits thought otherwise. The Fifth Circuit probably took umbrage with that tone and again applied Horton. It's notable that the dicta in the opinionis actually devoid of any words of reprimand for the NLRB.

What This Means for Employers

What this means is that at least several circuit courts have all agreed that employers may require prospective employees to sign mandatory arbitration agreements without running afoul of the NLRA. It has also been observed that Circuit courts generally are reticent to directly contravene the findings of another Circuit so general counsel and other firm strategists can breathe a little easier.

No guarantees, however, that the NLRB won't sue you anyway.

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